19 August 2021
ASX ANNOUNCEMENT
TWE 2021 Annual Report
Treasury Wine Estates Ltd (ASX:TWE) is pleased to present its Annual Report for the year
ended 30 June 2021.
For the purposes of ASX Listing Rule 15.5, TWE confirms that this document has been
authorised for release to the market by the Board.
Contacts:
Media
Melissa O’Neill
Tel: +61 3 8533 3923
Mob: +61 467 555 175
Investors
Bijan Taghian
Tel: +61 3 8533 3568
Mob: +61 433 173 664
T R E A S U R Y W I N E E S T A T E S L I M I T E D
A B N 2 4 0 0 4 3 7 3 8 6 2
L E V E L 8 , 1 6 1 C O L L I N S S T R E E T
M E L B O U R N E V I C 3 0 0 0 A U S T R A L I A
W W W . T W E G L O B A L . C O M
Annual
Report
2021
OUR AMBITION
To be the
world’s most
admired premium
wine company
CONTENTS
About Treasury Wine Estates (TWE)
At a glance
Chairman and Chief Executive Officer’s Report
Operating and Financial Review
Sustainability
Diversity and inclusion
Board of Directors
Corporate governance
Directors’ Report
Auditor’s independence declaration
F21 Remuneration Report
Consolidated statement of profit or loss
and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Independent auditor’s report
Details of shareholders, shareholdings,
and top 20 shareholders
Shareholder information
1
2
3
8
36
40
44
46
50
53
54
74
75
76
77
78
128
129
134
135
IMPORTANT INFORMATION
This report contains certain forward-looking statements, which may be identified by the use of terminology including but not limited
to, ‘intend’, ‘target’, ‘likely’, ‘could’, ‘aim’, ‘project’, ‘see’, ‘anticipate’, ‘estimate’, ‘plan’, ‘objective’, ‘believe’, ‘expect’, ‘may’, ‘should’, ‘will’,
‘would’, ‘continue’ or similar words. Indicators of and guidance on future earnings and financial position are also forward-looking
statements. These forward-looking statements are based on the information available as at the date of this Annual Report and are
not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and other factors, many
of which are beyond the control of TWE, and which may cause actual results to differ materially from those expressed or implied in
such statements. Further information on important factors that could cause actual results to differ materially from those projected
in such statements is included in the Material Business Risks section of the Operating and Financial Review. Readers are cautioned
against reliance on any forward-looking statements or guidance, particularly in light of the current economic climate and the
significant volatility, uncertainty and disruption arising in connection with COVID-19. Except as required by applicable regulations or
by law, TWE does not undertake to publicly update or review any forward-looking statements, whether as a result of new information
or future events. Past performance cannot be relied on as a guide to future performance. References to ‘TWE’, ‘Company’, ‘Group’,
‘we’, ‘us’ and ‘our’ are to Treasury Wine Estates Limited and/or, except where the context otherwise requires, its subsidiaries.
References to ‘F20’ and ‘F21’ are to the periods 1 July 2019 to 30 June 2020 and 1 July 2020 to 30 June 2021 respectively. All currency
referred to in the report is in Australian dollars, unless otherwise stated. In this report Hong Kong Special Administrative Region of the
People’s Republic of China has been referred to as ‘Hong Kong’.
2,600
Team members
We pride ourselves on
employing world-class
talent across Australia,
New Zealand, Asia,
the Americas, the
United Kingdom,
Europe, the Middle
East, and Africa.
70+Countries
Our iconic wines are
loved by consumers
around the world and
are available in major
retailers, premium wine
stores, restaurants,
bars, and online.
3Key divisions
A brand portfolio-led
operating model with three
key divisions – Penfolds,
Treasury Premium Brands
and Treasury Americas
– supported by centralised
business, supply, and
corporate functions.
12,700
Hectares
Our global multi-regional
sourcing model is at the
heart of our business and
includes vineyards and
production assets in some of
the world’s best wine regions.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 1
At a glance 1, 2
• F21 EBITS3 down 0.4% to $510.3 million; EBITS margin up 0.6 percentage
points to 19.9%
• EPS (before material items and SGARA) up 2.9% to 42.9 cents per share
• Return on Capital Employed increased 0.6 ppts to 10.8%
• Final dividend of 13 cents per share (fully franked); bringing F21 annual
dividend to 28 cents per share; up 62.5% on the prior period
• Full year cash conversion of 100.8%
EBITS
EPS (BEFORE MATERIAL ITEMS AND SGARA)
(Earnings before interest, tax, material items and SGARA)
(Earnings per share) (cents)
(A$ million)
.
8
3
4
5
.
6
3
6
4
.
7
4
6
6
.
6
2
1
5
.
3
0
1
5
F21
0.4%
decrease
.
2
7
5
1
.
9
4
.
0
8
3
7
.
1
4
.
9
2
4
F21
2.9%
increase
F17
F18
F19
F20
F21
F17
F18
F19
F20
F21
ROCE
MARKET CAPITALISATION
(Return on capital employed) (%)
(A$ million)
.
6
3
1
7
.
1
1
.
4
0
1
.
8
0
1
.
2
0
1
F21
0.6ppts
increase
17.39 14.92
13.16
10.48 11.68
0
0
5
2
1
,
9
2
7
0
1
,
4
1
7
9
,
F21
11%
increase in market
capitalisation
3
7
3
8
,
4
5
5
7
,
F17
F18
F19
F20
F21
F17
F18
F19
F20
F21
Share price
($ at 30 June)
1. Unless otherwise stated, all figures and percentage movements are stated on a reported currency basis and are subject to rounding.
2. TWE has updated its accounting policies in relation to the treatment of configuration and customization costs in cloud computing arrangements
in accordance with IFRIC agenda decision Configuration or Customisation Costs in Cloud Computing Arrangement (IAS38 Intangible Assets),
resulting in the restatement of historical financials for the period F18 to F20.
3. Earnings before interest, tax, SGARA and material items.
2 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Chairman and Chief Executive
Officer’s Report
This was a year of significant change and achievement for TWE.
Our ability to deliver a quality financial result and make progress
against our TWE 2025 ambition and game plan has been
outstanding and is testament to the commitment and strength
of our team, with the support of our partners and customers.
Paul Rayner Chairman
Tim Ford Chief Executive Officer
INTRODUCTION
Dear shareholders,
We are pleased to present the 2021 Annual Report for
Treasury Wine Estates Limited.
At the start of the fiscal year we launched our strategic
blueprint for the next five years, headlined by our
ambition to be the world’s most admired premium
wine company.
This ambition is underpinned by a commitment to
being bold in our decision making and the way we
innovate so that we can drive change in the world of
wine. Supporting this is our DNA – our cultural code that
defines who we are and how we behave so that we
create a positive experience for everyone who touches
our business.
Our ambition, game plan and DNA were launched
against a backdrop of significant disruption including
the ongoing impacts of the COVID-19 global pandemic,
the Californian wildfires, and the introduction of import
duties on Australian wine in China. They have been
critical in grounding our response strategies and
putting the consumer at the heart of everything we
do and every decision we make. In doing so, the team
has embraced disruption in a way that has informed
our strategy, reshaped our business to drive growth,
and permanently changed the way we engage with
customers and consumers.
We have demonstrated resilience and our ability to
innovate and deliver collaborative customer and
stakeholder partnerships that have ensured we can
effectively respond to the changing landscape
in which we operate.
Change will continue to be ever present in our business.
Now more than a year into the COVID-19 global
pandemic, we have successfully embraced flexible
working models and responded to consumer trends,
including the acceleration of e-commerce and digital
engagement, the rise of localism, increased in-home
consumption and heightened social consciousness,
to ensure we meet changing consumer expectations
and needs.
The effective closure of the Chinese wine market to
Australian wine was a significant event for Treasury
Wine Estates and the Australian industry in F21.
While this has presented challenges for TWE and
across the Australian industry, it has also created
opportunities for us to drive growth in other key global
markets, demonstrating the strength of our diversified
business model. Importantly, we remain committed
to the China market for the long term and continue
to invest in our team, our brands, and our relationships
with customers and consumers.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 3
CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REPORT (CONTINUED)
The strength of our team, our global diversified
business model, our iconic brand portfolio, and our
unrelenting focus on the consumer, means we are
well placed to deliver on the long-term growth
ambitions we set out in the TWE 2025 strategy.
CELEBRATING 10 YEARS
In F21, we celebrated 10 years of TWE and took the
opportunity to reflect on how far our business has
travelled since it was demerged from the Foster’s
Group in 2011. There have been numerous milestones
that have marked this journey, including our luxury
and premium wine portfolio led growth strategy,
the acquisition of Diageo wine in 2016, the acquisition
of production and vineyard assets in Bordeaux in 2019,
and the significant expansion of our South Australian
luxury winemaking infrastructure.
More recently, the resilience our business has shown
in successfully managing macro environmental
challenges has given us opportunities to reshape our
business and ensure we are well positioned for
long-term, quality growth in the years ahead.
We want to take this opportunity to recognise the
significant contribution that many people have played
in our growth and evolution during this past decade,
from our team, past and present, through to partners,
suppliers, communities, customers, and consumers,
as well as our shareholders.
OVERVIEW OF RESULTS
In F21 we delivered earnings before interest, tax,
material items and SGARA (EBITS) of $510.3 million in line
with the prior year, while our EBITS margin increased
0.6 percentage points to 19.9%. TWE continues to target
delivery of 25% Group EBITS margin.
In F21, TWE delivered strong growth in the $10-$30
Premium portfolio in the Americas, EMEA and ANZ
regions, led by 19 Crimes, Pepperjack, Squealing Pig,
Beringer Brothers and Matua. These positive growth
trends were moderated by ongoing global pandemic
disruptions, higher COGS and significantly reduced
shipments to Mainland China following the introduction
of import duties on Australian wine.
TWE continued our premiumisation journey, with Net
Sales Revenue (NSR) per case up in each region and
the luxury and premium portolios contributing 77%
of global NSR, up 71% in F20.
We fundamentally changed our business model in the
United States in F21 to better position us for sustainable,
long-term success. These significant changes included
the divestment of a significant portion of the commercial
portfolio. The Americas division continues to progress
initiatives focused on the divestment and exit of other
non-priority brands and these remain on track for
completion in F22.
Our diverse portfolio of brands continued to innovate
and gain recognition with the launch of the Penfolds
California Collection and the 19 Crimes Cali Red and
new Rosé varietals. Wolf Blass was recognised as
Red Winemaker of the Year at the 2021 International
Wine Competition, and Pepperjack again, held its
position as Australia’s number one Shiraz.
Yellowglen also had reason to celebrate teaming up
with Australian entertainment icon Dannii Minogue to
celebrate 50 years with the launch of its limited edition
50 Year Celebration Brut Cuvée.
Lindeman’s embraced sustainability, achieving
carbon neutral status for its European product range.
The brand also celebrated with its ‘Step into the
Sunshine’ campaign, which pledged to plant one tree
for every bottle sold, with the ultimate aim of planting
370,000 trees.
All regions contributed to our F21 result, with key
elements as follows:
• Asia reported a 15% decline in EBITS to $205.4 million
and an EBITS margin of 36.3% (down 2.8 ppts) with
shipments to Mainland China significantly reduced
following the implementation of import duties on
Australian wine (Mainland China EBITS declined
$77.3 million in F21). Pleasingly, this impact was partially
offset by continued growth across the rest of the
region, particularly for Penfolds Bin and Icon ranges,
despite ongoing pandemic restrictions to key luxury
sales channels. Margins were impacted by one-off
product re-work and logistics costs, as well as
committed brand investment in Mainland China.
• Americas reported a 23.0% increase in EBITS to
$168.3 million and an EBITS margin of 17% (up 4.2 ppts),
with positive momentum accelerating across the
retail and e-commerce channels for TWE’s premium
brand portfolio. This momentum has been led by 19
Crimes, which continues to outperform the market.
• Australia and New Zealand reported a 10.0% increase
in EBITS to $142.7 million and an EBITS margin of 23.7%
(up 1.7 ppts) reflecting ongoing portfolio premiumisation
which included growth in the Penfolds Bin and Icon
portfolio. This was partially offset by the higher cost
of goods sold (COGS) per case across the
commercial and premium portfolios.
• EMEA reported a 6% decline in EBITS to $46.6 million
and an EBITS margin of 11.3% (down 2.1 ppts), with 12%
top-line growth driven by strong performance in
retail channels. Offsetting this were higher COGS
and higher cost of doing business (CODB), including
one-off Brexit related costs. TWE’s focus brands
continue to perform strongly across key EMEA markets.
4 – TREASURY WINE ESTATES ANNUAL REPORT 2021
SUSTAINABILITY
THANKS AND CONCLUSION
Looking ahead, we will remain focused on delivering
sustainable top line growth and high, single-digit
average earnings growth over the long term.
We are positive on the outlook across key markets
outside Mainland China and we will continue to build
momentum behind the premium portfolio which has
seen strong performance globally in F21. We will also
continue to execute plans to deliver growth for Penfolds
Bin and Icon ranges.
In F22 we enter the next phase of our journey under
the brand and consumer focused divisional model led
by Penfolds, Treasury Americas and Treasury Premium
Brands. Each division is well positioned to leverage its
unique strengths to deliver on our strategic priorities
to drive quality growth over the long term.
We are confident that our strategic agenda, including
our elevated focus on digital consumer engagement
and experience, data and technology, sustainability,
culture and organisational capability, coupled with
our new operating model, positions us well to respond
to the changing landscape and progress our ambition
of becoming the world’s most admired premium
wine company.
Our people, alongside our suppliers, customers, and
partners, remain critical to delivering on this agenda.
With that in mind, we want to thank our global team
members for their outstanding efforts during the year.
We also want to acknowledge the care they continue
to show one another, and the way they have embodied
our DNA as they navigated another challenging year
to help us deliver against our strategic agenda.
In closing, we would like to extend our thanks to you,
our shareholders, for your ongoing belief, investment
in, and support of, TWE.
Kind regards,
Paul Rayner
Chairman
Tim Ford
Chief Executive Officer
In F21 we took a much bolder step towards
sustainability leadership, with the release of our
enhanced sustainability strategy, and an expanded
suite of targets that respond to the topics that matter
most to our business and our stakeholders.
The strategy reflects our ambition to cultivate a
brighter future for everyone who touches our business
and our products, with initiatives and programs focused
on delivering against three newly established goals:
building a resilient business; fostering healthy and
inclusive communities; and producing wine sustainably.
Underpinning this ambition and our goals, we
announced a number of new targets and commitments
focused on enhanced water stewardship and working
towards net zero emissions (scope 1 and 2) by 2030,
including a 100% renewable electricity target across
our global operations by 2024.
These are in addition to our existing priorities with
regard to health, safety and wellbeing including mental
health through our Destination Zero Harm program,
inclusion and diversity commitments and our
sustainable packaging targets.
More information about our enhanced strategy,
goals and the progress we are making against
our commitments will be available in our 2021
Sustainability Report. The report will be released
later in the year and will be available online
at www tweglobal.com/sustainability.
BALANCE SHEET STRENGTH AND DIVIDEND
TWE maintains financial metrics that are consistent
with an investment grade credit profile.
The Company’s balance sheet continues to be
strong with net debt down $376.5 million in F21 to
$1,057.7 million (inclusive of $140.7 million currency
benefit) and net debt to EBITDAS 1.6x down from
2.1x in F20. Total available liquidity of approximately
$1.2 billion was on hand at the end of F21 (F20: $1.4 billion).
Total capital expenditure (capex) for the year was
$121.2 million comprising maintenance and replacement
capital expenditure (capex) of $55.2 million, and
growth capex including investment in South Australian
luxury winemaking infrastructure and long-term
technology investments of $66.0 million.
Strong operating cash flow reflects a lower Californian
vintage intake and an adjusted Australian vintage,
in addition to the shift in the regional sales mix in Asia.
F21 cash conversion was 100.8% and 96.9%, excluding
the change in non-current luxury and premium
inventory, in line with our target of 90% or above.
Earnings per share (EPS) increased 1.8% to 34.7 cents
per share and return on capital employed (ROCE)
improved 10.8% demonstrating our continued
disciplined approach to capital allocation.
For F21, TWE is pleased to declare a final dividend
of 13 cents per share, fully franked, which brings the
total dividend for F21 to 28 cents per share.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 5
We want discovering and sharing our wines to be
just as enjoyable as drinking them. That’s why we
use our brilliant portfolio of brands, in-depth consumer
insights, and leading innovation to create memorable
moments for everyone. We’re all about creating
experiences that open up the world of premium
wine to more consumers to enjoy.
Creating
experiences
6 – TREASURY WINE ESTATES ANNUAL REPORT 2021
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 7
Operating and Financial Review
Treasury Wine Estates (TWE) is a premium focused, global
leader in wine, listed on the Australian Securities Exchange
(ASX). The Company is focused on delivering shareholder
value through the production of wine, and marketing and
selling quality wine brands to consumers around the world.
The following Operating and Financial Review contains
significant details of TWE’s business activities and
state of affairs that occurred during the year ended
30 June 2021.
TWE’S BUSINESS ACTIVITIES
TWE is a vertically integrated wine business, focused
on portfolio premiumisation supported by innovation,
brand building investment, and global sales and
marketing execution.
TWE’s brand portfolio is represented across the luxury,
premium and commercial1 price segments and sold in
more than 70 countries around the world. At the heart
of the business is TWE’s global, multi-regional sourcing
model which includes world-class vineyard and
production assets in internationally acclaimed
winemaking regions including the Barossa Valley in
Australia, Napa Valley in the United States, Marlborough
in New Zealand, Bordeaux in France, and Tuscany in Italy.
TWE employs a global team of over 2,600 people.
TWE’S ORGANISATIONAL STRUCTURE AND
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In F21, TWE operated under four regional segments:
• Australia and New Zealand (ANZ);
• Europe, Middle East and Africa (EMEA);
• Asia;
• Americas.
Effective 1 July 2020: Tim Ford was appointed CEO;
Tom King was appointed Managing Director Asia; and
Kerrin Petty was appointed Director Global Supply Chain.
At the end of F20, TWE undertook a detailed review
of its global brand portfolio and an assessment
of the optimal strategy and structure of the business.
Key outcomes of this review included the accelerated
reduction of the scale of the commercial wine business,
and the implementation of a new operating model.
1. TWE participates in three price segments; Luxury (A$30+), Premium (A$10-A$30) and Commercial (A$5-A$10). Segment price points
are retail shelf price.
Penfolds
CALIFORNIA COLLECTION UNVEILED
In March 2021, Penfolds unveiled the inaugural
California Collection — a range of four wines more
than 20 years in the making. The flagship wine,
2018 Quantum Bin 98 Cabernet Sauvignon, was
awarded 100 points by Somm Journal Magazine
(US). To support the release, Penfolds partnered
with Australian-born NBA All-Star Ben Simmons
and produced a range of social and digital assets
for American and Australian audiences.
8 – TREASURY WINE ESTATES ANNUAL REPORT 2021
New operating model
Commercial wine business reduction
From F22, TWE will shift from a sales region-led business
model to a brand portfolio led divisional model with
three new standalone divisions:
• Treasury Americas led by Ben Dollard;
• Penfolds led by Tom King;
• Treasury Premium Brands (TPB) led by Peter Neilson.
The rationale for the new operating model is to drive
increased focus and accountability and support
optimal long-term growth and value creation.
Initiatives to reduce the scale of the commercial wine
business were progressed in F21 and continue to
remain on track for completion in F22. In March 2021,
TWE announced an agreement in relation to the exit
of several commercial tier brands from our US portfolio.
These brands represent a significant portion of the US
commercial portfolio and a significant step towards
delivering a premium focused US wine business.
Exploration of additional opportunities for brand, asset
and lease portfolio rationalisation continue in the US.
Our new operating model
Increased focus and accountability to unlock our long-term growth potential
Treasury
Premium Brands
Treasury
Americas
Limited editions
Bin and Icon
Supply
US Supply
Treasury Business Solutions
Corporate Functions
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 9
OPERATING AND FINANCIAL REVIEW (CONTINUED)
COVID-19 impact on business performance
Managing business performance throughout the
global pandemic has been a top priority. Our COVID-19
Plan Ahead Agenda has supported the business well
through this time of challenge and has helped to drive
positive momentum.
Restrictions continued to impact TWE’s global
operations, with key sales channels remaining in
varied states of impact and recovery. During F21, retail
and e-commerce continued to demonstrate strong
performance, offset by varying levels of disruption
to sales channels for higher margin luxury wine
including on-premise, cellar doors, and travel retail.
TWE remains confident that, as these channels
re-open and consumption demand returns, it is
very well placed to further the pace of its recovery.
Duty on Australian wine imports into China
In August 2020, TWE was advised that the Chinese Ministry
of Commerce (MOFCOM) had initiated an anti-dumping
investigation into Australian wine exports into China.
This was followed by the implementation of provisional
measures commencing from 28 November 2020, where
a deposit rate of 169.3% was applied to the imported
value of TWE’s wine in containers of two litres or less.
TWE announced that we expected demand for our
portfolio in China to be extremely limited as a result
of these measures and immediately implemented
a detailed response plan to reduce the impact on
earnings and maintain the long term diversification
and strength of TWE’s business model and brands.
These plans included driving incremental growth
across priority global markets, China business model
enhancements, and global operating model changes.
A final determination was announced by MOFCOM in
March 2021, with a combined anti-dumping and
countervailing duty rate of 175.6% applied to TWE’s
Australian country of origin wine in containers of two
litres or less imported into China. The final determination
applied from 28 March 2021 and will remain in place for
at least five years. This determination did not result in
any change to TWE’s previously articulated response
plan, with benefits expected to progressively reach
their full potential over a two to three year period.
TWE maintains our long-term commitment to China
and the growing number of consumers who enjoy
TWE’s brands.
Other than the above changes and those matters
referred to in the ‘TWE Vision and Strategy’ section of
the Operating and Financial Review, and the Financial
Statements in this Annual Report, there have been no
other significant changes in the state of affairs of the
Company during the financial year.
Squealing Pig
DRINKS INNOVATION
Tapping into the popularity of gin, quirky label Squealing
Pig pushed category boundaries with the launch of two
‘Ginseccos’ – gin and prosecco spritzers – and a Pinot
Noir Gin. These refreshing drinks innovations open doors
to new consumers and occasions and help contribute
to Squealing Pig’s consumer awareness, consideration
and purchase intent, which have tripled since 2017.
10 – TREASURY WINE ESTATES ANNUAL REPORT 2021
TWE’S BUSINESS MODEL
TWE is a vertically integrated wine business with three
principal activities:
• grape growing and sourcing;
• wine production; and
• wine marketing, sales and distribution.
Grape growing and sourcing
TWE secures access to grapes and bulk wine from
a range of sources including Company-owned and
leased vineyards, grower vineyards, and the bulk wine
market. The Company’s sourcing mix varies by region
as shown in Figure 1.
Figure 1: TWE’s regional sourcing model2
Australia
30%
47%
California
22%
8%
New Zealand
28%
46%
Italy
31%
2%
France
26%
TWE owned/leased
Grower contracts
Third-party produced wine
23%
70%
26%
67%
74%
Proactively taking steps to de-risk TWE’s global sourcing
model by embedding flexibility and diversification
across geographic regions, varietals and price
segments continues to be a driver of the Company’s
sourcing strategy.
By embedding a diversified sourcing model as well as
focusing on multi-region and multi-country sourcing,
TWE is better able to manage vintage variation as well
as grape and bulk wine pricing through periods of
grape shortages and surpluses.
This diversification and flexibility also enables TWE
to react to changes in consumer and customer
preferences to support growth.
TWE owns and leases 9,260 planted hectares of
vineyards in Australia and New Zealand and is the
custodian of some of the most sought after viticultural
assets in renowned winemaking regions, including
the Barossa Valley and Coonawarra in Australia,
and Marlborough in New Zealand.
The Company also owns and leases 3,200 planted
hectares in key viticultural regions in California,
including the Napa Valley, Sonoma County, Lake
County, and Central Coast.
TWE continues to optimise our inventory holdings to
support portfolio premiumisation and at the same
time pursue initiatives to reduce production costs
across the luxury, premium and commercial segments,
globally. In F20, TWE commenced a global supply
chain optimisation program, implementing a range
of initiatives expected to deliver annualised benefits
of at least $75 million by F233.
At the same time, TWE continues to focus on securing
increased access to luxury and premium fruit from
multiple countries of origin via vineyard acquisitions,
vineyard leasing, entering into supply contracts with
third party growers as well as increasing our sourcing
of commercial grade wine from the bulk wine market.
2. Regional sourcing is historical data for the Northern Hemisphere V20 vintage and the Southern Hemisphere V21 vintage. The Californian vintage
has not been adjusted to exclude inventory associated with the US Commercial portfolio brands divested in March 2021.
3. F20 base, excluding inflation and volume-mix impact on COGS.
Wolf Blass
RED WINEMAKER OF THE YEAR
Wolf Blass was thrilled to be recognised as Red Winemaker
of the Year at the 2021 International Wine Competition — the
world’s most influential annual wine competition. This is an
incredible achievement on a global scale and is the fourth
time that Wolf Blass has been awarded this prestigious honour.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 11
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Wine production
TWE owns world-class wine production and
packaging facilities.
• In Australia, TWE owns and operates eight wineries
and one packaging centre. TWE’s wines are primarily
produced in South Australia and Victoria.
• In New Zealand, TWE owns one winery located
in the Marlborough.
• In the US, TWE has seven wineries and one packaging
facility located in the North and Central Coast
regions of California.
• In Europe, TWE owns one winery in Italy and one
winery in France.
Marketing, selling and distribution of TWE wine
TWE generates revenues and profits from the
production, marketing and sale of our portfolios
of branded wine.
TWE markets, sells and distributes our branded wine to
a range of customers in more than 70 countries around
the world, tailoring and optimising our route-to-market
model by country to capitalise on regional insights
and opportunities.
The Company has taken deliberate action to embed
greater balance across our regional earnings mix,
sourcing models and earnings delivery.
TWE’s profitability is increasingly being driven by
high-growth segments, being luxury and premium,
as well as improved profitability across all segments
(including the commercial segment).
Figure 2 shows the net sales revenue (NSR) and earnings
before interest, tax, material items and SGARA (EBITS)
contribution by region in F21.
Figure 2: TWE’s business performance by region in F21
NSR
(Net sales revenue) ($M)
EBITS contribution4
(Earnings before interest, tax, material items and SGARA)($M)
ANZ 23%
Americas 39%
EMEA 16%
Asia 22%
ANZ 25%
Americas 30%
EMEA 8%
Asia 37%
4. Excludes corporate costs of $52.7 million.
Penfolds
PENFOLDS HOUSE SHANGHAI LAUNCHES
Penfolds celebrated the launch of its 2020 Collection with
an immersive ‘Penfolds House’ consumer event in China.
Held at a historical villa in Shanghai’s fashionable Xintiandi
area, the three-week experience showcased the numerical
significance and philosophy behind Penfolds’ winemaking
legacy through three-dimensional installations and
engaging artwork, while serving as a platform for
masterclass tastings and wine engagements for media,
customers and consumers.
12 – TREASURY WINE ESTATES ANNUAL REPORT 2021
GLOBAL INDUSTRY OVERVIEW
Global wine production and consumption
Global wine production in 2020 was in line with the 2019
year and can be described as slightly below average.
Production was again driven by the main European
producing countries of Italy, France, and Spain.
Figure 3: Global wine production and consumption5
Consumption decreased slightly when compared to
2019 driven by the COVID-19 pandemic and the impact
on the hotel, restaurant, and catering industries. China
saw the largest decline in consumption down 17% on
2019, partially offset by increases in Italy up 8% and the
UK up 2%.
a
h
m
11.0
10.0
9.0
8.0
7.0
6.0
1979
19 8 0
19 81
19 8 2
19 8 3
19 8 4
19 8 5
19 8 6
19 87
19 8 8
19 8 9
19 9 0
19 91
19 9 2
19 9 3
19 9 4
19 9 5
19 9 6
19 97
19 9 8
19 9 9
20 0 0
Global vineyard area
Global wine production (RHS)
Global wine consumption* (RHS)
20 01
20 02
20 0 3
20 0 4
20 0 5
20 0 6
20 07
20 0 8
20 0 9
2010
2011
2012
2013
2014
2015
2016
2 019 Pro v.
2 0 2 0 Prel.
2 018
2 017
4,500
4,000
3,500
3,000
2,500
2,000
1,500
s
e
s
a
c
e
L
9
m
5. International Organisation of Vine and Wine (OIV).
* Consumption figures include ~330m 9L cases of wine used in the production of fortifieds & industrial applications
19 Crimes
CALI ROSÉ LAUNCHES
Hot on the heels of Snoop Dogg and 19 Crimes’ first
collaboration – Snoop Cali Red – came 19 Crimes
Snoop Cali Rosé launching in the US. This is the first
Californian Rosé for the brand using a blend of
Grenache and Zinfandel. Snoop Cali Rosé breaks
the rules of typical Rosé culture with a touch of
Cali-behaviour and Snoop’s iconic West Coast
Style. The easy-drinking wine encourages
consumers to raise a glass and celebrate life’s
greatest wins the way Snoop Dogg does, with
no rules attached!
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 13
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Figure 4: Forecast five-year compound annual growth rate (CAGR) in wine consumption
in key growth areas and markets6
Markets
United States
Canada
Latin America
Australia
United Kingdom
Nordics
Netherlands
China
Rest of North Asia
South Asia
CAGR (2020 – 2024F)
1.7%
(0.5)%
1.4%
1.1%
(1.1)%
(2.3)%
(0.1)%
7.8%
2.7%
2.5%
While total wine consumption is forecast to decline in some markets due to a flat to declining commercial segment,
consumer demand remains strong at premium and luxury price points.
6. International Wine and Spirits Record (IWSR) 2021, still, sparkling and fortified wine only. Value growth, Asia imported wine only.
Beringer Bros.
COUNTRY MUSIC PARTNERSHIP
Beringer Bros. kicked off a partnership with the Country Music
Association (CMA) to drive new consumer engagement
with the growing spirit barrel aged wine segment. Country
music is the perfect fit with the pioneering spirit of Beringer
Bros. and its American roots. Beringer Bros. leveraged the
2020 CMA Country Christmas to execute in-store and digital
programming leading up to the TV broadcast. We continued
to drive awareness by inviting consumers to enter for a
chance to win a VIP Pass to CMA Festival 2022, an event
that attracts tens of thousands of country music fans
to Nashville, Tennessee.
14 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Figure 5: Value growth by price point
United States of America7
United Kingdom8
>$20
20%
19%
4%
$8–$20
10%
-5%
$4–$8
5%
35%
30%
16%
28%
£16+
£6–£16
<£6
-2%
-8%
Mkt MAT* to June 21
Mkt MAT to June 20
Mkt MAT to June 21
Mkt MAT to June 20
* Moving average total
Australia9
>$30
4%
$10–$30
11%
7%
-9%
<$10
-1%
Value growth of Australian bottled wine
exports to Asia (excluding China)10
27%
$30
-1%
$10–$30
-7%
16%
9%
<$10
-6%
101%
Mkt MAT to June 21
Mkt MAT to June 20
Mkt MAT to June 21
Mkt MAT to June 20
IRI Market Advantage, Table $4+, Still bottled wine only, MAT to 4 July 2021.
7.
8. Nielsen Scantrack, Light Wine SKU, Value % change, data to 17 July 2021.
9. Aztec Sales Data, Off-premise Channel Only (scan measured market), Bottled and canned wine only, Unweighted MAT to 4 July 2021.
10. Wine Australia MAT to June 2021, Bottled wine exports to Asia (excluding China).
Pepperjack
REINVENTION BRINGS GROWTH
Pepperjack continues to be Australia’s #1 Shiraz
and in 2021 it underwent a reinvention — with fresh
packs, new worldly varietals like Grenache and
Malbec, and a new brand platform that reinforces
the brand’s quality role in bringing great mates
together. The ‘When Character Counts’ campaign
launched in outdoor, digital, social, and radio.
Overall, the relaunch has driven significant
new sales momentum for the brand.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 15
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Figure 6: TWE Vision and Strategy
TWE’s strategic vision and strategic imperatives were refreshed in F21 and are set out below.
TWE
Ambition
To be the world’s
most admired
premium wine
company
TWE
Way
We boldly lead
change in the
world of wine
TWE GAME
Plan
How we
will win
- Consumer focused
premium brand
portfolio
- Multi-regional & multi-
channel sales models
- World class talent
- Sustainable & multi-
regional sourcing
& winemaking
- Deep, long-term
partnerships &
networks
WHAT ARE THE ELEMENTS
& HOW DOES IT ALL
COME TOGETHER?
- We bring our
whole self
- We are
courageous
- We deliver
together
TWE
Our cultural
code
TWE
GAME
P lan
CONSUMER FOCUSED
PREMIUM BRAND
PORTFOLIO
MULTI-REGIONAL &
MULTI-CHANNEL
SALES MODELS
WORLD CLASS
TALENT
• TWE DNA at the heart
• Consumer-led &
• Strengthened
of all we do
experience focused
marketing as
our advantage
• Focused portfolio of
brands with clear &
leadership position in
China & Australia
• US established as
a premium wine
growth business
• Targeted growth
• Core objective to drive
more consumption
occasions
through our markets
in rest of Asia &
Europe
• Bold, consumer need
driven innovation to
build the future
• Category leadership
with key retailers
• Acceleration in
direct to consumer &
ecommerce channels
– ours & our
retail partners’
• Employee experience
focused culture –
a great place to work
• Broad diversity &
inclusion agenda
• Continuous &
company wide
learning through
TWEforME Academy
•
use of technology to
enable collaboration,
connection &
development
DEEP, LONGTERM
PARTNERSHIPS
& NETWORKS
• Mutually beneficial
partnerships across:
– Customers
– Growers
– Suppliers
– Communities
– Government &
industry bodies
• Strong third-party
expertise leveraged
for non-core
business activities
SUSTAINABLE &
MULTI-REGIONAL
SOURCING
& WINEMAKING
• Continued building
& diversification of
premium sourcing
across Australia, the
US & Europe
• Consumer led
wine making at
the best cost
• Sustainable supply
chain, with a focus
on water surety,
emissions, climate
adaptation &
packaging
• Fit for purpose asset
base structured to
deliver sustainable
performance now &
in the future
16 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Strategic imperative
Progress against initiative in F21
Consumer
focused premium
brand portfolio
• Driving Penfolds’ reinvention from fine wine brand to global luxury icon through the launch
of the Californian Collection, a partnership with Chinese luxury lifestyle brand Shang Xia,
and the release of the Penfolds G4 – a blend of four exceptional Grange vintages.
• 19 Crimes partnering with entertainment icon Snoop Dog to launch its first Californian
wine which has seen tremendous success globally. The launch of a Rosé followed
in March 2021 and is also resonating strongly with consumers.
• Undertook our largest ever investment in wine intelligence to enhance our understanding
of the luxury consumer and their relationship with wine.
• Wynns (Australia’s #1 Shiraz) and Pepperjack (Australia’s second most cellared Cabernet)
were given a renewed focus. Wynns launched a new global brand platform designed
to make its luxury credentials more accessible whilst Pepperjack was rejuvenated with
fresh packs, a new mateship-based brand platform and worldly new varietals.
Multi-regional &
multi-channel
sales models
• Accelerated investment in sales and marketing to grow distribution and availability
of TWE brands in Asia (excluding China).
• Accelerated investment behind existing and new direct to consumer (DTC)
platforms globally.
• Partnered with our customers to maximise the three-tier e-commerce opportunity, globally.
• A detailed omni-channel consumer research study was conducted in the Americas
to better inform e-commerce investment decisions.
World-class
talent
• Launched our TWE DNA following a collaborative process including internal and external
research and employee feedback.
• Continued to leverage technology for collaboration, connection and development
across our globally dispersed workforce during extended periods of working from home.
• Increased investment in continuous and company-wide learning through our
TWEforME Academy.
• Continued to invest in and evolve our diverse, inclusive and collaborative culture,
anchored in our TWE DNA, through various initiatives.
• Undertook global surveys focused around Diversity and Inclusion, as well as overall
employee engagement. From these surveys we have understood what our employees
value when working at TWE, and identified opportunities for focus in F22.
Sustainable &
multi-regional
sourcing &
winemaking
• Progressed the expansion of TWE’s Barossa Winery and associated consolidation
of Penfolds’ Nuriootpa Winery.
• Further expanded TWE’s French winemaking capacity by expanding existing assets.
• Divested a number of non-core US brands and vineyards.
• Embedded a global cost optimisation program into all supply chain functions
and processes, expected to deliver annualised benefits of at least $75 million by F23.
• Launched our new sustainability strategy, which sets out an expanded suite of targets
as well as progressing our two-year Climate Scenario Analysis.
Deep, longterm
partnerships &
networks
• Treasury Americas reached a long-term agreement with Republic National Distributing
Company (RNDC) to distribute TWE’s portfolio of luxury and premium wines throughout
several states including California and Texas.
• Established a long-term partnership with Accenture to support our technology
transformation journey leveraging their extensive experience with industry-leading
technology insights to implement the solutions required to meet TWE’s strategic objectives.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 17
OPERATING AND FINANCIAL REVIEW (CONTINUED)
FUTURE PROSPECTS
TWE remains focused on leveraging its organisational,
strategic and physical assets across the world to
deliver quality growth. Our long-term financial growth
objectives are centred around driving profitability,
efficient capital usage, and the delivery of sustainable
shareholder returns, as listed below.
• Deliver sustainable top-line growth and high
single-digit average earnings growth11.
• Continue the premiumisation of sales mix.
• Expand EBITS margin to 25% and beyond.
• Restore return on capital employed (ROCE)
to pre-pandemic levels and then grow.
• Maintain cash flow and capital metrics in line with
an investment grade credit profile, including cash
conversion of 90%+ (excluding the investment in
non-current Luxury and Premium inventory) and net
debt to EBITDAS to remain below 2.0x through the cycle.
Each division will contribute differently towards our
long-term objectives, with their own financial targets.
• Penfolds will focus on growth in revenue to drive
earnings growth, with an EBITS margin target
of 40-45%.
• Treasury Americas will focus on improvement in
mix to drive revenue growth along with cost and
asset base optimisation to support higher earnings
and improved return on capital, with an EBITS margin
ambition of 25%.
• Treasury Premium Brands’ growth objectives are
focused on premiumisation and cost and capital
efficiency opportunities with a high-teens
EBITS margin ambition.
Areas of near-term focus that may impact TWE’s
future operational and financial prospects, excluding
material business risks which are outlined in the next
section, are listed below.
• Delivering continued momentum behind the premium
portfolio, which has shown strong performance
globally in F21.
• Successful execution of plans to deliver growth for
Penfolds Bin and Icon ranges in markets outside of
China, with continued recovery in key luxury channels an
important enabler of future Penfolds portfolio growth.
• The short-term impact of the COVID-19 pandemic
on trading conditions in TWE’s key markets remains
uncertain, despite recent reopening in on-trade
channels and improving trade through cellar doors.
Retail and e-commerce channels continue to
perform strongly, albeit with moderating rates of
growth, while travel retail remains severely impacted.
Continued reopening of key sales channels will be an
important enabler of future luxury portfolio growth.
• Mix-adjusted cost of goods sold (COGS) per case is
expected to remain elevated, with benefits from the
lower cost 2021 Australian vintage (commercial
portfolio) offset by the higher cost 2020 Australian
vintage (premium portfolio), recent higher cost US
luxury vintages and dyssynergies following the US
commercial portfolio divestment. Successful
execution of supply chain optimisation programs to
improve COGS will have a modest benefit in F22, with
full run rate benefits of at least $75 million expected
from F23 and beyond.
• Close monitoring of global demand trends and
adjustment of Australian vintage 2022/23 intake,
as required, through key initiatives including bringing
forward vineyard re-development programs that
will reduce our intake from our own asset base
in the short term whilst positioning for growth again
in the long-term and reviewing upcoming grower
contract renewals.
11. Organic, pre-material items and on a constant currency basis. Continuation of COVID-19 related disruptions to key sales channels for luxury
wine may impact short-term performance.
Yellowglen
TOASTS A MILESTONE BIRTHDAY
Much-loved Australian sparkling wine, Yellowglen,
celebrated 50 fabulous years in 2021. To mark this
milestone, Yellowglen teamed up with another Aussie
icon who celebrated 50 years in 2021 — fashion and
entertainment icon, Dannii Minogue.
As Australia’s most popular sparkling, Yellowglen has
become an icon of Australian celebrations and the
launch of its limited edition 50 year Celebration Brut
Cuvée is befitting to mark occasions big and small.
18 – TREASURY WINE ESTATES ANNUAL REPORT 2021
MATERIAL BUSINESS RISKS
There are various risks that could have a material impact on the achievement of TWE’s strategies and future
prospects. Below are those risks that TWE considers of greatest materiality to the business, and existing mitigations
against these risks.
Our material risks have not fundamentally changed in F21, however, the risks listed below have elevated in focus.
• Protectionism and geopolitical uncertainty heightened further during F21, elevating the risk of operating
in a changing geopolitical environment and of significant business disruption.
• The unknown length or depth of the COVID-19 health and economic crisis, and the impact on social restrictions
and the global economy, elevating the risk of changing consumer preferences and market trends.
• An increase in cyber threats with increasingly sophisticated and indiscriminate attacks on companies and
organisations, elevating the risk of Information security and/or cyber-attacks.
Risk
Description
Mitigation
Climate
The impacts of climate change may
lead to adverse effects on business
operations and performance. A
changing climate presents physical
risks such as more frequent extreme
weather events and changing
temperatures. It could lead to
restrictions on access to and/or an
increase in the cost of water. The
inability of third-party suppliers to
adapt to and mitigate against climate
change, could impact TWE’s ability
to effectively source grapes and wine
for production.
In addition, transition risks such as
governmental actions to reduce
the impacts of climate change,
through emission reduction targets
or cross-border carbon adjustment
mechanisms may also impact TWE’s
cost base.
Misaligned
supply and
demand for
region,
variety and
grade of
grapes
TWE’s ability to fulfil demand, in
particular growing demand for luxury
wine or specific varietals, can be
restricted by the availability of grapes.
Over time, changing consumer
preferences affects demand for
certain regional, varietal and/or grade
of grapes, providing both potential
opportunities for growth and potential
price pressure on existing inventory/
committed supply. As a result, financial
results could be affected, both in the
year of harvest and in future periods.
• Maintain multi-region sourcing model to mitigate against
over-reliance on a single region, continue to focus on
premiumisation and secure alternative methods to source
commercial fruit and bulk wine.
• Invest in the Company’s adaptive capacity through
innovative agronomic practices such as delayed pruning,
improve canopy and vine architecture, installation of frost
fans, and trialing non-traditional grape varietals (including
drought resistant clones and root stocks), as well as
embedding multi-regional growing and sourcing.
• Invest to ensure resilience when building or
upgrading facilities.
• Climate Scenario Analysis to understand what future
trends, opportunities and risks may emerge as a result
of climate change and their potential financial and
operational impacts on our business and its strategy.
• Strategic climate change remediation investment plan
and vineyard capital investment plan.
• Closely monitor weather patterns and climate impacts on
vintage timing and compression and use that information
to inform vintage planning processes. This includes
technology partnerships to improve decision making
in response to changes.
• Encouraging key businesses in our value chain to capture,
report and reduce their emissions.
• Multi-regional growing and sourcing.
• Balanced grape intake between owned/leased vineyards
and third-party suppliers.
• Long-term vintage planning and ongoing demand
planning processes, to align our supply with our insights
from monitoring changing consumer preferences.
• Strong grower relationships and defined service
level agreements.
• Ongoing customer/distributor relationship management
to understand changes in demand and achieve
alignment with our current and future portfolio of products.
• Strategic climate change remediation investment plan
and vineyard capital investment plan.
• Innovative agronomic practices to improve vineyard yield.
• Global wine allocation process for constrained products
to maximise value from products where supply is unable
to meet demand.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 19
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Risk
Description
Mitigation
Loss of key
leadership/
talent
Brand
reputation/
damage
TWE’s ability to deliver on strategic
targets is reliant on attracting and
retaining experienced, skilled and
motivated talent in core functions such
as winemaking, sales and marketing.
It also requires strong, resilient and
effective leaders as the business
grows at pace.
Inability to retain key talent can impact
relationships with TWE’s key partners,
result in lost business knowledge,
increase risk of employee burnout, and
hamper the business’ ability to deliver
on key initiatives.
The strength of TWE’s portfolio of
brands is key to the success of the
business. Managing the reputation
of brands, and mitigating the potential
damage to brands from internal
and external activity, including
counterfeited product, black market
trade, inaccurate media coverage,
unsatisfactory supplier performance,
product quality issues, etc. is critical to
TWE’s ongoing success.
Failure to protect and effectively
manage TWE’s portfolio of brands
could have significant reputational
and financial repercussions.
Partner
performance
and market
concentration
TWE relies on a number of key
partners (suppliers, distributors and
retailers) to support the delivery of key
strategic initiatives. The suboptimal
performance of these partners, and/or
their market concentration and power,
could have a significant impact on
TWE’s ability to deliver these initiatives.
• Strategically aligned and targeted learning and
development programs.
• Strategic workforce planning.
• Talent review and succession planning processes.
• Employee safety (including health, wellbeing, and
resilience) program.
• Incentive and reward programs for team members,
aligned to the achievement of TWE’s financial and business
goals and demonstration of the right behaviours.
• Market competitive remuneration and benefits.
• Brand portfolio and product strategy, including portfolio
rationalisation, prioritisation and targeted investment in
consumer marketing.
• Consumer insights and innovation team supporting
the monitoring and awareness of brand health and
consumer trends.
• Product pricing strategy and global pricing alignment.
• Code of Conduct, Responsible Marketing Guidelines,
Responsible Consumption program, Responsible
Procurement Code, Environment Policy and Standard,
Media Policy, Social Media Policy and incident
management procedures.
• Sustainability program.
• Global media monitoring (including social/digital media).
• Brand and intellectual property protection strategies.
• Multi-regional and diversified supplier, distributor and
retailer base.
• Responsible Procurement Code (RPC) to define our broader
requirements of our suppliers, including expectations
related to Human Rights, Safety, and the Environment.
• Defined and pre-approved terms of engagement.
• Investment in strong and multifaceted key partner
relationships.
• Joint business planning processes with customers
and distributors to support and align their interests
with our objectives.
• Regular performance reviews.
Changing
laws &
regulations
TWE operates in a highly regulated
industry in many of the markets in
which it makes and sells wine. Each
of these markets have differing
regulations that govern many aspects
of TWE’s operations, including taxation,
production, manufacturing, pricing,
marketing, advertising, distribution
and sale of wine.
Remaining compliant with and
abreast of additional regulations
and changes to existing regulations
requires diligent and ongoing
monitoring by the business.
• Company-wide policies, standards and procedures.
• TWE Compliance Framework.
• Specialised and experienced resources and teams.
• Executive Leadership Team oversight via the Risk,
Compliance and Governance Committee.
• TWE risk and assurance framework, including targeted
reviews by external and internal audit and other
specialist providers.
• Relationships and engagement (where relevant) with
key government, industry advocacy and regulatory bodies
to understand emerging issues and opportunities, and
collaborate on advocacy strategies.
20 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Risk
Description
Mitigation
Changing
geopolitical
environment
Significant
business
disruption
and/or
catastrophic
damage or
loss
Foreign
exchange
rate impacts
Information
security/
cyber/
fraud threat
Instability in the markets in which
we operate could impact consumer
demand, ability to trade, access to
new markets, disruption to global
supply chains and other barriers to
the movement of people and goods
across international borders.
There is heightened geopolitical
tension as countries seek to balance
national security, global leadership
and cooperation and competition,
nationalisation and economic
recovery. The uncertain ongoing
impacts of COVID-19, including
sustained lockdowns, social and
travel restrictions, could add to the
geopolitical tensions.
TWE’s scope of operations exposes
us to a number of business disruption
risks, such as environmental
catastrophes, natural and man-made
hazards and incidents, or politically
motivated violence.
Significant business disruption could
result in TWE sites or employees
being harmed or threatened, loss of
key infrastructure, inability to trade,
inventory shortages, excess or loss,
customer dissatisfaction, or financial
and reputational loss.
TWE is exposed to foreign exchange risk
from several sources, namely from the
export of Australian produced wine to
key offshore markets in North America
and Europe. Foreign exchange rate
movements impact TWE’s earnings on
a transactional and translational basis.
Data/information security is essential
to protect business critical intellectual
property and privacy of data.
Continuing advances in technology,
systems and communication channels
mean increasing amounts of private
and confidential data are now stored
electronically. This, together with
increasing cyber-crime, heightens the
need for robust data security measures.
• Continue to grow our diversified portfolio of products
and markets including Australia, US, Europe, Middle East,
and Asia.
• We respect local laws wherever we operate and have
implemented robust trade compliance procedures
and controls.
• Relationships and engagement (where relevant) with key
government, industry advocacy and regulatory bodies.
• Flexible supply chain practices.
• Crisis Management and Business Continuity plans.
• Seek opportunities for strategic investment from, and into
key markets to capture new growth opportunities and
enhance connection to key markets.
• Crisis, Business Continuity and Disaster Recovery plans,
training and resources.
• Dedicated health and safety team oversight, audit
programs and training.
• Preventative repair and maintenance program.
• Multi-regional sourcing and production capability.
• Multi-regional sales diversification.
• Comprehensive insurance program.
• Global business planning processes.
• Financial risk management (refer to Page 111).
• Active foreign exchange hedging strategy.
• Partial natural hedges (purchases and sales within the
same currency) where possible.
• Matched debt funding of assets by currency, where possible.
• Information Security Policy, supporting framework and
specialised resources.
• Restricted and segregated management of sensitive
business/supplier/customer data.
• Periodic employee training and alerts to ensure secure
handling of sensitive data.
• Crisis, Business Continuity and Disaster Recovery plans.
• Periodic user access and general system penetration testing.
• Defined Cyber Security Strategy and Governance.
• Program to monitor and detect cyber threats across the
enterprise network.
• Vulnerability management program to identify and
remediate susceptible high-risk areas within the
enterprise environment.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 21
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Risk
Description
Mitigation
Infrastructure
supporting
growth
Changing
consumer
preferences
and market
trends
The business relies on IT infrastructure,
systems and processes to support
ongoing business growth. Where
such infrastructure cannot efficiently
support the changing needs of the
business, there is risk of process
inefficiency and/or error, which
includes increased costs and
processing times or damage to
business reputation.
The business’s ability to effectively
manage current and non-current
inventory is intrinsically linked to actual
and forecast consumer demand –
particularly given the long product
lead-time and agricultural nature
of the business.
Unanticipated changes in consumer
demand or preferences can have
adverse effects on the business’s
ability to either capture growth
opportunities or manage supply.
• Defined and Executive Leadership Team approved
IT roadmap and strategy.
• A global Enterprise Resource Planning system and
reporting capability.
• IT policies and supporting procedures (security, change
management, project management, etc.).
• Documentation and mapping of key processes and
controls across the business.
• Semi-annual key control self-assessment process.
• Implementation of a new divisional operating model
to enable a separate focus across our brand portfolios,
so we’re better positioned to anticipate and respond
to changing consumer preferences and customer
market trends.
• Dedicated consumer insights and innovation team,
tracking consumer trends and researching new
opportunities.
• Brand portfolio and product strategy, including portfolio
rationalisation, prioritisation and targeted investment
in consumer marketing.
• Global business planning processes, including portfolio
reviews and global volume alignment processes.
• Strategic focus on premium (high demand) categories.
Wynns
CELEBRATES BIG WINS
Wynns shone brightly in F21 in recognition of its
wines and winemakers. Cath Kidman was awarded
‘Viticulturist of the Year’ at the 2020 Gourmet Traveller
WINE Winemaker of the Year Awards and Wynns also
proudly launched its John Riddoch 2016 Cabernet
Sauvignon at the esteemed La Place de Bordeaux,
one of only two Australian wines to do so.
22 – TREASURY WINE ESTATES ANNUAL REPORT 2021
PROFIT REPORT
Key Highlights
Business headlines
• In F21, TWE demonstrated strong execution and
organisational resilience during a year of significant
disruption, including ongoing impacts from the
global pandemic, the Californian wildfires and the
introduction of import duties on Australian wine
in Mainland China.
• Top-line growth in Asian markets outside of Mainland
China, the Americas, ANZ and EMEA reflects positive
momentum across TWE’s globally diversified
business; organic12 NSR grew 4.4% in F21.
• TWE continues its premiumisation journey, with NSR
per case up in each region and the contribution
of the Luxury and Premium portfolios increasing
to 77% of global NSR (up from 71% in F20).
• Consumer and experience led portfolio expansion
was a highlight in F21, with brand innovations such
as Penfolds California Collection and 19 Crimes Cali
Red and Rose varietals enjoying outstanding success.
• TWE’s business in the United States has been
fundamentally changed and is now well placed for
sustainable long-term success, with the divestment
of a significant portion of the Commercial portfolio in
March 2021 and route to market changes, particularly
in California and Texas, important milestones. TWE
is continuing to progress initiatives focused on the
divestment and exit of other non-priority brands,
operating assets and leases, and these remain
on track for completion by end 1H22.
• TWE is progressing with its plans to drive incremental
growth for the Penfolds Bin and Icon portfolio, with
global NSR growing 7% in F21, supported by accelerated
investment in sales and marketing capability to
build demand and drive distribution and availability
across key growth markets. The release of the
Californian Collection, Penfolds first multi-COO
release, was a significant brand highlight in F21.
• TWE has made significant progress on its global
supply chain optimisation program, and now expects
to achieve annualised benefits of at least $75 million
by F2313.
• Effective 1 July 2021, TWE transitioned to a new
operating model under three brand-led portfolio
divisions – Penfolds, Treasury Premium Brands and
Treasury Americas. TWE expects this model will
maximise the long-term benefits of separate focus
across its diverse brand portfolios and leverage the
scale of TWE’s global business model.
F21 Luxury and Premium contribution
to Group NSR
77%
6ppts vs. pcp
EBITS by region
Reported currency
Constant currency
A$m
F21
F20
Restated
F20
Restated
%
%
Americas
Asia
ANZ
EMEA
168.3
205.4
142.7
46.6
136.9
22.9%
109.2
54.1%
241.5
(14.9)%
248.2
(17.2)%
130.1
49.5
9.7%
(5.9)%
138.4
46.0
3.1%
1.3%
Corporate
(52.7)
(45.4)
(16.1)%
(45.2)
(16.6)%
TWE EBITS
510.3
512.6
(0.4)%
496.6
2.8%
Financial headlines14, 15
• EBITS of $510.3 million before material items up 2.8%
and EBITS margin increased 0.3ppts to 19.9%; on an
organic basis, EBITS increased 3.5%.
• Strong growth in the $10-$30 Premium portfolio
and improved CODB was moderated by ongoing
impacts from the global pandemic, significantly
reduced shipments to Mainland China following the
implementation of import duties and higher COGS
on Australian sourced wine.
• NPAT and EPS (before material items and SGARA)
increased 6.4% and 6.2% respectively.
• Cash conversion of 100.8% reflects continued strong
operating cash flow performance, a lower Californian
vintage intake and an adjusted Australian vintage
intake, in addition to the shift in regional sales mix
in Asia. Excluding the change in non-current Luxury
and Premium inventory, cash conversion was 96.9%.
• TWE’s strong, flexible balance sheet and investment
grade capital structure retained, with Net Debt16
reducing $376.5 million to $1,057.7 million (inclusive
of $140.7 million favourable currency movement)
and Net Debt to EBITDAS significantly improved
to 1.6x (F20: 2.1x).
• A post-tax net material items loss of $66.1 million
has been recognised in F21 and relates to divestment
of US brands and assets, the South Australian Luxury
winery expansion and the overhead and supply
chain restructuring programs.
• TWE has to date confirmed cash proceeds totalling
approximately $150 million as a result of the asset
divestments in the US, and continues to expect net
cash inflows under the restructuring program
to total approximately $300 million.
12. On a constant currency basis, excluding US Commercial brands divested in March 2021.
13. F20 base, excluding inflation and volume mix-impact on COGS.
14. Financial information in this report is based on audited financial statements. Non-IFRS measures will not be subject to audit or review.
The non-IFRS measures are used internally by Management to assess the operational performance of the business and make decisions
on the allocation of resources.
15. Unless otherwise stated, all percentage or dollar movements from prior periods contained in the Profit report are pre-material items
on a constant currency basis versus the prior corresponding period and are subject to rounding.
16. Net debt excludes fair value adjustments related to derivatives that are in a fair value hedge relationship on a portion of US Private
Placement notes: F21 +$21.6 million, F20: +$41.7 million.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 23
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Dividend
• Final dividend 13.0 cents per share (up 62.5% on
the F20 final dividend), fully franked, representing
a pay-out ratio of 65% 17.
Outlook
• TWE’s financial objective is to deliver sustainable
top-line growth and high-single digit average
earnings growth over the long-term18.
• In F22, TWE is positive on its outlook across key
markets outside of Mainland China, with its focus
to be on continuing the strong momentum in its
Premium portfolio in addition to executing plans
to drive continued growth for Penfolds Bin and Icon
ranges, with encouraging performance having been
delivered in F21, and particularly 4Q21. COGS per case
are expected to remain elevated, with benefits from
the lower cost 2021 Australian vintage (commercial
Profit and Loss
portfolio) offset by the higher cost 2020 Australian
vintage (premium portfolio), recent higher cost US
Luxury vintages and dis-synergies following the US
commercial portfolio divestment.
• TWE will continue to closely monitor global demand
trends and will adjust intake for the upcoming
Australian vintages in 2022 and 2023, as required.
Key initiatives include bringing forward vineyard
redevelopment programs that will reduce intake
from its own asset base in the short term while
positioning for growth again in the long-term,
in addition to reviewing upcoming grower
contract renewals.
• TWE expects Net Debt to EBITDAS to remain below
its up to 2.0x target throughout F22.
$Am (unless otherwise stated)
F21
F20 Restated
Change
F20 Restated
Change
Reported Currency
Constant Currency
Net sales revenue
NSR per case ($)
Other Revenue
Cost of goods sold
2,569.6
2,649.5
83.84
28.2
81.88
28.7
(1,573.1)
(1,588.9)
Cost of goods sold per case ($)
Gross profit
Gross profit margin (% of NSR)
51.32
1,024.7
39.9%
49.10
1,089.3
(3.0)%
2.4 %
(1.7)%
1.0 %
(4.5)%
(5.9)%
2,535.4
78.35
26.1
(1,501.3)
46.39
1,060.2
1.3 %
7.0 %
8.0 %
(4.8)%
(10.6)%
(3.3)%
41.1%
(1.2)ppts
41.8%
(1.9)ppts
Cost of doing business
(514.4)
(576.7)
Cost of doing business margin (% of NSR)
EBITS (before material items)
EBITS margin (%)
SGARA
EBIT (before material items)
Net finance costs
Tax expense
Net profit after tax (before material items)
Material items (after tax)
Non-controlling interests
Net profit after tax
Reported EPS (A¢)
20.0%
510.3
19.9%
9.4
519.7
(73.5)
(130.1)
316.1
(66.1)
–
250.0
34.7
21.8%
512.6
19.3%
(41.3)
471.3
(85.9)
(113.7)
271.7
(26.2)
–
245.4
34.1
Net profit after tax (before material items
and SGARA)
EPS (before material items and SGARA) (A¢)
Average no. of shares (m)
Dividend (A¢)
309.6
300.4
42.9
721.4
28.0
41.7
719.9
28.0
10.8 %
1.8ppts
(0.4)%
0.6ppts
NM
10.3 %
14.4 %
(14.4)%
16.3 %
NM
–
1.8 %
1.8 %
3.0 %
2.9 %
–
(563.6)
22.2%
496.6
19.6%
(41.5)
455.1
(80.6)
(112.5)
262.0
(25.0)
–
237.0
32.9
291.0
40.4
719.9
28.0
8.7 %
2.2ppts
2.8 %
0.3ppts
NM
14.2 %
8.8 %
(15.6)%
20.6 %
NM
–
5.5 %
5.5 %
6.4 %
6.2 %
–
17. TWE targets a dividend payout ratio of between 55%-70% of Net Profit After Tax (pre-material items and SGARA) over a fiscal year.
18. Organic, pre material items and on a constant currency basis. Continuation of COVID-19 related disruptions to key sales channels for Luxury wine
may influence short-term performance.
24 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Revenue
Tax expense
• NSR increased 1.3% (4.4% on an organic basis) driven
by strong execution and continued premiumisation
momentum across all regions. Partly offsetting were
the continuation of global pandemic disruptions
to key sales channels for Luxury wine, the significant
decline in shipments to Mainland China as a result
of implementation of import duties and the divestment
of US Commercial brands in March 2021.
• NSR per case grew in all regions and increased 7.0% at
a Group level, led by the Premium portfolio, while
disruptions to key channels for Luxury wine continued
to impact volumes. In F21, the Luxury and Premium
portfolios combined contributed 77% of TWE’s global
NSR (up from 71% in F20).
• Increase in tax expense reflects higher earnings in
F21, with the effective tax rate of 29.1% consistent with
the prior year.
Material Items
• A post-tax net material items loss of $66.1 million has
been recognised in F21 and relates to the divestment
of US brands and assets, the South Australian Luxury
winery expansion and the overhead and supply
chain restructure.
Net profit after tax (NPAT)
• NPAT before material items and SGARA $309.6 million,
up 6.4%, driven by lower net finance costs and
tax expense.
• F21 other revenue includes insurance proceeds
Earnings Per Share (EPS)
relating to the California wildfires.
Cost of Goods Sold (COGS)
• COGS per case increased 10.6% due to the portfolio
mix shift, higher COGS on Australian sourced
Commercial and Premium wine, the impact
of inventory damaged by the Californian wildfires
and one-off costs relating to the implementation
of import duties in Mainland China and Brexit.
Cost of Doing Business (CODB)
• CODB improved 8.7% and CODB margin improved
2.2ppts to 20.0%, driven by:
– The new US sales and marketing model and
• EPS (before SGARA and material items) increased
6.2% to 42.9 cents per share. Reported EPS increased
5.5% to 34.7 cents per share.
Balance Sheet (condensed)19
A$m
Cash & cash equivalents
Receivables
Current inventories
F20
Restated
F21
448.1
622.0
839.7
449.1
554.1
1,017.4
Non-current inventories
1,056.8
1,059.2
organisational structure (implemented 4Q20); and
Property, plant & equipment
1,322.5
1,397.4
Right of use lease assets
Agricultural assets
Intangibles
Tax assets
Assets held for sale
Other assets
Total assets
Payables
Interest bearing debt
Lease liabilities
Tax liabilities
Provisions
Other liabilities
Total liabilities
Net assets
448.4
33.8
517.0
34.1
1,155.5
1,294.1
183.7
140.2
33.5
193.8
74.3
54.2
6,284.2
6,644.7
703.6
915.2
612.6
330.7
104.8
26.1
682.1
1,227.0
698.6
357.2
59.2
24.5
2,693.0
3,048.6
3,591.2
3,596.1
– In Mainland China, lower overheads under the
future state business model and alignment of
brand building investment to reduced sales volume.
Corporate costs
• Corporate costs increased 16.6% to $52.7 million,
reflecting higher discretionary employee
incentives in F21.
EBITS
• EBITS $510.3 million in line with the prior year on a
reported basis and up 2.8% on a constant currency
basis; on an organic basis, EBITS increased 3.5%.
• EBITS margin increased 0.3ppts to 19.9%; TWE
continues to target delivery of 25% Group
EBITS margin.
SGARA
• SGARA gain of $9.4 million reflects gains from the
high yielding 2021 Australian vintage and the
unwinding of prior period losses, partly offset by the
impact of a significant reduction in tonnage and
yield from the 2020 Californian vintage which resulted
in a loss of $24.0 million.
Net finance costs
• Net finance costs were 8.8% favourable in F21, driven
by lower average net borrowings and the benefit
of lower average interest rates.
19. Unless otherwise stated, balance sheet percentage or dollar movements from the previous period are on a reported currency basis.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 25
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Balance sheet movements as at 30 June 2021
Tax and other assets
Net assets declined $4.9 million to $3,591.2 million.
Adjusting for movements in foreign exchange rate
movements, net assets increased by $113.4 million.
Working Capital
Working capital declined $133.7 million to $1,814.9 million:
• Inventory declined $180.1 million to $1,896.5 million.
Including the impact of foreign currency movements
from the stronger Australian dollar:
– Current inventory declined $177.7 million to
$839.7 million and includes the reduction in
inventories following the disposal of US
Commercial portfolio brands.
– Non-current inventory was broadly in line with
the prior year, with the carry-forward of Luxury
inventory that had been allocated for sale in
Mainland China and the higher 2021 vintage in
Australia largely offset by the lower 2020 vintage
in California.
– Luxury inventory declined 2% to $1,072.3 million,
with volume in line with the prior year.
• Receivables increased $67.9 million, including
a receivable of approximately $40 million
relating to insurance claims associated with
the California wildfires.
Property, Plant & Equipment
Property, Plant & Equipment decreased $74.9 million
to $1,322.5 million driven by foreign currency
movements and the transfer of assets in the US to be
held for sale as part of key restructuring initiatives.
Right of use lease assets
Right of use lease assets decreased $68.6 million
to $448.4 million driven by depreciation expense
and foreign currency movements.
Agricultural assets
Agricultural assets represent the fair value of unharvested
grapes prior to the 2021 Northern hemisphere vintages.
Intangibles
Intangible assets decreased by $138.6 million to
$1,155.5 million, driven by foreign currency movements
and divestment of Commercial brands in the US.
Decrease in net tax liabilities driven by higher
instalments paid in F21 and foreign currency movements.
Assets held for sale
Assets held for sale primarily relate to assets in the US,
including wineries, vineyards and brands identified for
disposal as part of plans to deliver the future state
premium wine business.
Other assets and liabilities
Other assets and liabilities include derivatives in
relation to TWE’s foreign currency and interest rate
hedging program.
Provisions
Provisions includes allowance for future repairs on
leased assets damaged by the Californian wildfires,
recoverable under insurance.
Net Borrowings20
Net Borrowings, including lease liabilities per AASB 16,
decreased by $396.8 million to $1,079.7 million comprising:
• Cash, which was broadly in line with prior year
$448.1 million.
• Interest bearing borrowings decreased by $311.8 million
to $915.2 million.
• Lease liabilities decreased $86.0 million to $612.6 million.
Balance sheet leverage
Net debt to EBITDAS 1.6x, down from 2.1x in F20. For
financial covenant reporting purposes, which excludes
the capitalisation of leases, Net debt to EBITDAS was
0.9x and interest cover was 11.9x.
Funding structure
At 30 June 2021, TWE had committed debt facilities
totalling approximately $1,692.7 million, comprising:
• Drawn bank facilities of $466.0 million and
$432.7 million of US Private Placement notes.
• Undrawn committed, bilateral debt facilities
totalling $794.0 million.
The weighted average term to maturity of committed
facilities was 4.0 years at 30 June 2021, with the Group’s
liquidity position (including cash and committed
undrawn facilities) totalling $1,242.1 million.
20. Interest bearing debt includes fair value adjustments related to derivatives that are in a fair value hedge relationship on a portion of US Private
Placement notes: F21 +$21.6 million, F20 +41.7 million.
26 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Cash flow – reconciliation of net debt21
Other items
A$m (unless otherwise stated)
EBITDAS
Change in working capital
Other items
Net operating cash flows before
financing costs, tax & material items
Cash conversion
Payments for capital expenditure
and subsidiaries
Proceeds from sale of assets
Cash flows after net capital
expenditure, before financing
costs, tax & material items
Net interest paid
Tax paid
Cash flows before dividends
& material items
Dividends/distributions paid
Cash flows after dividends before
material items
Material item cash flows
On-market share purchases
Total cash flows from activities
(before debt)
Net (repayment)/proceeds
from borrowings
Total cash flows from activities
F20
Restated
F21
661.0
675.9
(60.3)
65.6
(22.2)
(14.9)
Other items reflects movements in provisions, relating
primarily to damage on leased properties from the
Californian wildfires (against which a receivable has
been recognised for insurance claims) and the
write-down of intangibles and inventories as part
of the divestment of US Commercial portfolio brands.
Capital expenditure
666.3
100.8%
638.8
94.5%
Capital expenditure (capex) of $121.2 million comprising:
• Maintenance & Replacement capex of $55.2 million.
(121.2)
(166.9)
4.8
100.2
• Growth capex of $66.0 million including investment
in South Australian Luxury winemaking infrastructure
and long-term technology investments.
549.9
(72.3)
(118.4)
572.1
(84.1)
(168.0)
359.2
320.0
(158.7)
(276.3)
200.5
53.1
0.9
43.7
(19.8)
(4.9)
254.5
19.0
(245.8)
8.7
28.8
47.8
In F22, capex is expected to be up to $150.0 million,
including up to $100 of maintenance and replacement
expenditure and up to $50 million of continued
investment to support future premiumisation and growth.
Proceeds from sale of assets
Reflects receipts from the sale of surplus supply assets,
excluding material items.
Net interest paid
Net interest paid favourable by $11.8 million driven by
lower average net borrowings and the benefits of lower
average interest rates.
Tax paid
Decrease in tax paid reflects lower earnings in F20
compared to F19.
Dividends paid
Decrease in dividends paid reflects payment of the
F21 interim dividend of 15 cents per share and the F20
final dividend of 8 cents per share.
In F21, TWE paid dividends totalling $158.7 million.
Material item cash flows
Material item net cash inflow of $53.1 million reflects
the divestment of vineyard assets in California and
a significant portion of the US Commercial brand
portfolio in March 2021.
On-market share purchases
Opening net debt
(1,434.2)
(1,380.0)
Total cash flows from activities
(above)
Net lease liability additions
Net debt acquired
Debt revaluation and foreign
exchange movements
(Increase)/Decrease in net debt
254.5
(18.7)
-
140.7
376.5
19.0
(41.3)
(4.9)
(27.0)
(54.2)
Closing net debt
(1,057.7)
(1,434.2)
No shares were purchased on market in F21.
Movement in net debt
Net debt22 declined $376.5 million to $1,057.7 million,
with drivers of the movement including:
EBITDAS
EBITDAS declined $14.9 million to $661.0 million on a
reported currency basis, driven by foreign currency
movements and lower depreciation expense following
the divestment and transfer to held for sale of US
assets as part of key restructuring initiatives.
Movement in working capital23
Net working capital outflow of $60.3 million is driven
by the high-yielding 2021 Australian vintage and
higher receivables, which include insurance claims
associated with the Californian wildfires.
Net lease liability additions
Additions of $18.7 million primarily reflects new leases
of supply assets in Australia and California.
Exchange rate impact
Higher period-end exchange rates used to revalue
foreign currency borrowings and cash as at 30 June
2021 decreased net debt by $140.7 million.
Cash conversion
Cash conversion of 100.8% reflects continued strong
operating cash flow performance, a lower Californian
vintage intake and an adjusted Australian vintage
intake, in addition to the shift in regional sales mix in
Asia. Excluding the net change in non-current Luxury
and Premium inventory, cash conversion was 96.9%.
21. Unless otherwise stated, cash flow percentage or dollar movements from the previous period are on a reported currency basis.
22. Net debt excludes fair value adjustments related to derivatives that are in a fair value hedge relationship on a portion of US Private
Placement Notes: F21 +$21.6 million, F20 +$41.7 million.
23. Change in working capital reflects operating cash flow movements.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 27
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Regional summaries
Asia
Financial performance
Historical reported EBITS and EBITS margin
Reported
currency
Constant
currency
A$m
F20
Restated
F21
F20
Restated
%
%
NSR (A$m)
565.3
617.1
(8.4)%
615.1
(8.1)%
NSR per case (A$) 248.15
187.78
32.1%
187.17
32.6%
EBITS (A$m)
205.4
241.5
(14.9)%
248.2
(17.2)%
EBITS margin (%)
36.3%
39.1% (2.8)ppts
40.4% (4.1)ppts
F21 Luxury and Premium contribution to NSR
94%
5ppts in F21
A$m
350.0
300.0
250.0
200.0
150.0
100.0
50.0
0.0
1H
2H
FY EBITS
margin
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
F17
F18
F19
F20 F21
BUSINESS PERFORMANCE
ASIAN REGIONAL PERSPECTIVES
• Volume and NSR declined 30.7% and 8.1% respectively:
• Wine consumption declined across Asia in 2020 as
– shipments to Mainland China were significantly
reduced following the implementation of import
duties; and
– throughout the rest of Asia, NSR rose 21.5% despite
ongoing pandemic restrictions to key Luxury sales
channels, driven by strengthening demand for TWE’s
brand portfolio including Penfolds Bin and Icon.
• NSR per case increased 32.6%, reflecting improved
mix as the contribution of the Luxury and Premium
portfolios increased to 94% of Asia region NSR
(an improvement of 5ppts).
• COGS per case increased 50.1% as a result of
improved portfolio mix and one-off costs including
additional freight (demurrage) costs on clearance
delays through Chinese ports.
• CODB improved 11.3%, driven by the alignment
of brand investment in Mainland China (net
of reinvestment to other regional markets) and
reduced overheads under the future state
business model.
• In Mainland China, 2H21 EBITS totalled $5.3 million,
including sales of TWE’s multi-COO portfolio (F21
Mainland China EBITS $84.1 million, a $77.3 million
decline on F20).
• Regional EBITS declined 17.2% to $205.4 million and
EBITS margin declined 4.1ppts to 36.3%; excluding
one-off costs relating to China, regional EBITS margin
was in line with the high 30% margin target.
a result of pandemic related disruptions to key sales
channels and consumption occasions24. Across
large parts of the region, significant disruptions
and impacts continue.
• Over the long-term, the fundamentals of the wine
category remain positive in Asia, with consumption
of Premium and Luxury wine expected to return
to growth.
• The growth of the Penfolds Bin and Icon range is
accelerating in key regional markets (including Hong
Kong, Singapore, Malaysia and Thailand), satisfying
previously unmet demand and reflecting the initial
benefits of investment in sales and marketing
capability. In F21, NSR ex-Mainland China grew
38% and TWE is targeting continued growth of the
Penfolds Bin and Icon range in these markets in F22
and beyond.
• In Mainland China, TWE will continue to invest in
the portfolio as it progresses its multi-COO portfolio
growth strategy, with 2H21 highlights including the
launch of the Penfolds Californian Collection and
the release of Rawson’s Retreat sourced from
South Africa.
• Ongoing strong consumer demand for the Australian
sourced Penfolds Bin and Icon continues, and TWE
is planning to sell through these products at higher,
tariff inclusive retail prices, through F22. TWE continues
to expect minimal EBITS contribution in Mainland
China, net of brand building investment, in F22.
24. IWSR 2021, imported wine only
28 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Regional summaries
Americas
Financial performance25
Historical reported EBITS and EBITS margin
Reported
currency
Constant
currency
A$m
F20
Restated
F21
F20
Restated
%
NSR (A$m)
988.7 1,069.4
(7.5)%
970.3
NSR per case (A$)
87.13
86.06
1.2%
78.08
%
1.9%
11.6%
EBITS (A$m)
168.3
136.9
22.9%
109.2
54.1%
EBITS margin (%)
17.0%
12.8% 4.2ppts
11.3% 5.7ppts
Organic
Reported
currency
Constant
currency
NSR (A$m)
875.6
865.5
1.2%
787.0
NSR per case (A$) 103.52
112.03
(7.6)%
101.87
11.3%
1.6%
EBITS (A$m)
156.8
120.6
30.0%
94.7
65.6%
EBITS margin (%)
17.9%
13.9% 4.0ppts
12.0% 5.9ppts
A$m
300.0
250.0
200.0
150.0
100.0
50.0
0.0
1H
2H
FY EBITS
margin
20%
15%
10%
5%
0%
F17
F18
F19
F20
F21
F21 Luxury and Premium contribution to NSR
80%
9ppts in F21
BUSINESS PERFORMANCE
AMERICAS REGIONAL PERSPECTIVES
• Volume declined 8.7% while NSR increased
• Strong premiumisation trends have continued
1.9%, reflecting:
– the divestiture of a significant portion of the US
Commercial brand portfolio in March 2021;
– strong momentum in the retail and e-commerce
channel, which supported growth in the Premium
portfolio; and
– on an organic basis, shipments and NSR increased
9.5% and 11.3% respectively.
• In the US, shipments were in line with depletions, and
excluding new product launches, 3% below depletions.
• NSR per case increased 11.6%, reflecting the impact
to portfolio mix with the Luxury and Premium
portfolios now contributing 80% of regional NSR
(an improvement of 9ppts).
• COGS per case increased 6.7% as a result of mix shift,
higher costs on US sourced Luxury and Commercial
wine and the impact of inventory damaged by the
Californian wildfires (the cost of this impact was
recovered through insurance and disclosed as
Other Revenue26).
• CODB improved 13.5% driven by the new sales
and marketing organisational structure that was
implemented in 4Q20.
• Regional EBITS increased 54.1% to $168.3 million on a
reported basis and EBITS margin increased 5.7ppts
to 17.0%; on an organic basis, EBITS increased 65.6%.
in the US market, with the $11+ price points growing
12% in F2127.
• TWE’s focus brand portfolio is continuing its strong
momentum, growing 23% in F21 and outperforming
the category, led by 19 Crimes, Penfolds, Beringer
Brothers, Matua and St Huberts the Stag27.
• The Americas delivered outstanding innovation
success with 19 Crimes Cali Red becoming the
number one growth brand in the category27
and 19 Crimes Cali Rose resonating strongly with
consumers after launching in March. In addition,
the launch of the inaugural Penfolds Californian
collection was met with an outstanding response
from critics, customers and consumers.
• In 4Q21, TWE saw modest recovery in on-premise,
which has largely reopened, but activity remains
below pre-pandemic levels due in part to reduced
outlets and constraints on staff availability. Cellar
doors have also reopened, with improved
momentum in the lead up to the key summer period.
• Transition of distribution arrangements to RNDC in
California, Texas and several surrounding states has
commenced, with minimal disruptions. TWE expects
this partnership to support continued growth across
its Premium and Luxury portfolios.
• TWE continues to progress optimisation of its US
asset base to ensure Treasury Americas is positioned
for sustainable long-term success. Reducing supply
chain dis-synergies following the Commercial
portfolio divestment is a key priority in F22.
25. Organic performance on a constant currency basis, excluding US Commercial brands divested in March 2021.
26. Further insurance claims are currently in progress, determination pending.
27. IRI Market Advantage MULO+Conv; Still Wine Segment 52 wks ending 27 June 2021.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 29
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Regional summaries
Australia & New Zealand (ANZ)
Financial performance
Historical reported EBITS and EBITS margin
Reported
currency
Constant
currency
A$m
F21
F20
%
F20
NSR (A$m)
602.1
592.4
1.6%
591.8
%
1.7%
NSR per case (A$) 83.88
EBITS (A$m)
142.7
76.12
130.1
10.2%
76.04
10.3%
9.7%
138.4
3.1%
EBITS margin (%)
23.7%
22.0% 1.7ppts
23.4% 0.3ppts
F21 Luxury and Premium contribution to NSR
78%
3ppts in F21
A$m
200.0
150.0
100.0
50.0
0.0
1H
2H
FY EBITS
margin
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
F17
F18
F19
F20
F21
BUSINESS PERFORMANCE
ANZ REGIONAL PERSPECTIVES
• Volume declined 7.8% and NSR increased 1.8%,
• TWE expects Australian wine market volume
driven by:
– increased contribution from the Luxury and
Premium portfolios, driven by TWE’s focus brands;
– price uplift and optimised investment across select
Premium portfolio brands; and
– reduced contribution of Commercial
portfolio volumes.
• NSR per case increased 10.3% driven by improved
mix with the Luxury and Premium portfolios now
contributing 78% of regional NSR, up 3ppts in F21.
• COGS per case increased 14.1%, reflecting portfolio
premiumisation, higher cost vintages for Australian
sourced wine and incremental costs associated
with finished goods that had been intended for sale
in Mainland China.
• CODB improved 8.9% driven by lower overheads and
reduced A&P during the pandemic impacted period.
These amounts are expected to normalise in F22.
• Regional EBITS increased 3.1% to $142.7 million and
EBITS margin improved 0.3ppts to 23.7%.
and value growth to be driven by the Luxury and
Premium price points, a trend which has continued
strongly through the pandemic for trusted and
well-known brands.
• While there has been progressive re-opening of
on-premise venues in Australia through F21, key sales
channels for higher margin Luxury wine, including
travel retail and cellar doors, remain subdued due
to ongoing government restrictions on gatherings
and mobility.
• In the retail channel, market growth continues to be
driven by above $10 price points, with the Premium
price segment the biggest contributor to category
growth in F21. TWE’s focus brand portfolio continues
to perform strongly, led by Pepperjack, St Huberts
the Stag, Wynns, 19 Crimes and Squealing Pig28.
• Penfolds Bin and Icon delivered strong gains in ANZ
through F21, with NSR up 15%, setting a solid platform
for future growth.
• Innovation remains a key source of growth for TWE,
with a highlight in F21 being the successful extension
of Pepperjack into new emerging varietals to
become a leader in the growing malbec and
grenache categories in Australia29.
• Retail market conditions remained favourable post
the 2021 vintage despite the loss of Mainland China as
an export market, with strong domestic consumption
and export demand continuing. Australian retail
pricing trends have remained constant.
28. Aztec sales value data, bottle and canned wine only, Australia liquor weighted, 52 weeks to 4 July 2021.
29. Aztec sales value data, bottle and canned wine only, Australia liquor weighted, 52 weeks to 4 July 2021.
30 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Regional summaries
EMEA
Financial performance
Historical reported EBITS and EBITS margin
Reported
currency
Constant
currency
A$m
A$m
F20
Restated
F21
F20
Restated
%
%
NSR (A$m)
413.5
370.6
NSR per case (A$) 41.99
41.81
11.6%
0.4%
358.2
15.4%
40.41
3.9%
EBITS (A$m)
EBITS margin (%)
46.6
11.3%
49.5
(5.9)%
46.0
1.3%
13.4% (2.1)ppts
12.8% (1.5)ppts
F21 Luxury and Premium contribution to NSR
42%
7ppts in F21
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
1H
2H
FY EBITS
margin
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
F17
F18
F19
F20
F21
BUSINESS PERFORMANCE
EMEA REGIONAL PERSPECTIVES
• Volume and NSR increased 11.1% and 15.4%
• Long-term wine category value growth is being
respectively, led by growth in the Premium portfolio
through retail channels across the UK and
Continental Europe.
driven by premiumisation across key EMEA markets,
and TWE’s Premium brand portfolio is well positioned
to continue taking advantage of this trend.
• NSR per case improved 3.9%, reflecting improved
• The wine category remains in growth across key
portfolio mix, with the contribution of the Luxury and
Premium portfolios increasing 7ppts to 42% of EMEA
region NSR.
• COGS per case increased 7.1%, driven by the improved
portfolio mix, higher cost on Australian and US
sourced wine and one-off Brexit related costs.
• CODB increased 9.7%, with accelerated brand
building investment for key portfolio brands the
key driver.
• EBITS increased 1.3% to $46.6 million and EBITS margin
declined 1.5ppts to 11.3%.
retail markets in EMEA, with in-home consumption
a strong consumer trend resulting from the global
pandemic. The recent change of restrictions in some
markets is expected to see some softening in retail
channel performance which may slow the pace of
top-line performance throughout the region in F22.
• Key focus brands including 19 Crimes, Penfolds,
Matua, Wolf Blass, Blossom Hill, Lindeman’s and
Squealing Pig all delivered strong top-line growth
in F21, with 19 Crimes the stand-out after becoming
a 1m+ case brand across EMEA.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 31
OPERATING AND FINANCIAL REVIEW (CONTINUED)
VINTAGE UPDATE
Australia
The 2021 Australian vintage was 31% higher30 than the
2020 vintage after a season characterised by excellent
growing conditions. TWE benefited from a more even
intake over an extended period of time fully utilising the
winery network and resulting in good grade conversion
for key varietals. A highlight was the quality of the
Cabernet Sauvignon from the Limestone Coast for key
brands. Proactive adjustments were made to intake
volumes in response to revised demand expectations
for Mainland China.
California
The 2021 California growing season has been
influenced by persistent drought conditions. There was
minimal frost experienced early in the growing season
and fruit set conditions were generally favourable
across the state. However, the drought conditions and
above average temperatures are expected to impact
berry sizing and overall yield. Quality is expected to
be sound based on the season thus far, particularly
in regions with sufficient water.
New Zealand
The 2021 New Zealand vintage was 19% smaller30 than
2020 due to cooler spring weather and late frosts with
central regions including Marlborough impacted the
most. Despite the smaller volumes, overall quality was
high with Marlborough Sauvignon Blanc a highlight in
2021, with strong aromatics, generosity on the palate
and excellent acid structure. The reduced Sauvignon
Blanc production is expected to lead to some
undersupply of the varietal as strong global demand
continues, however TWE is comfortable with its supply
position compared to expectations for demand in F22.
France
France has experienced a very challenging growing
season so far with frost, hail-storms and a wet
beginning to summer in some regions. Bordeaux and
Provence are the most unaffected vineyards. Cabernet
Sauvignon has been less impacted by the frost and
had a good fruit set rate in the Bordeaux area. Harvest
is forecast to occur at the end of September as per
average. TWE vineyards are looking healthy and quality
is forecast to be good, pending growing conditions
through summer.
30. Ciatti. Global Market Report July 2021
Stags’ Leap
TAKES THE LEAP
Stags’ Leap Winery is redefining how a luxury wine
brand speaks to consumers. This year, Stags’ Leap
Winery launched its new dynamic campaign, ‘Take the
Leap’ — artful worlds made for the explorer in everyone,
inviting consumers to leap into the unknown just like
the wine’s namesake. Through a collaboration with
three up-and-coming artists, the team brought the
Stags’ Leap label to life, enticing consumers to join
our stag as it travels the world.
32 – TREASURY WINE ESTATES ANNUAL REPORT 2021
RECONCILIATION OF KEY PERFORMANCE MEASURES
Below numbers are in $ million unless otherwise stated.
Metric
Definition
Management calculation
F21
F20
EBITS
Earnings before interest, tax, material
items and SGARA.
Statutory net profit
Income tax expense
Net finance costs
Material items
SGARA
EBITS
EBITDAS Earnings before interest, tax, depreciation,
EBITS
amortisation, material items and SGARA.
Depreciation & amortisation
EBITDAS
EPS
Earnings per share. Net profit after tax
excluding SGARA and material items,
divided by the weighted average number
of shares outstanding.
Statutory net profit
Material items
Tax on material items
ROCE
Return on capital employed. EBITS divided
by average capital employed (at constant
currency). Capital employed is the sum of
average net assets (excluding SGARA) and
average net debt.
SGARA
Tax on SGARA
NPAT (before material items and SGARA)
Weighted average number of shares
EPS (cents)
EBITS
Capital employed – current year
Net assets
SGARA in inventory
Net debt
Capital employed – prior year (CFX)
Net assets
SGARA in inventory
Net debt
250.0
107.7
73.5
88.5
(9.4)
510.3
510.3
150.7
661.0
250.0
88.5
(22.4)
(9.4)
3.0
309.7
721.4
42.9
510.3
245.4
103.3
85.9
36.6
41.3
512.6
512.6
163.3
675.9
245.4
36.6
(10.4)
41.3
(12.5)
300.4
719.9
41.7
512.6
3,591.2
3,596.1
(32.2)
1,057.7
4,616.7
(18.0)
1,434.2
5,012.3
3,477.7
3,652.6
(22.9)
1,343.0
4,797.8
(12.5)
1,400.8
5,040.9
Average capital employed
4,707.3
5,026.6
ROCE
10.8%
10.2%
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 33
Winemaking is steeped in tradition, but innovation is crucial
if we want to unlock new growth opportunities. That’s why
we’re challenging the status quo and driving new initiatives
where our consumers want it most – through digital
experiences, new product development, and sustainability.
Bold innovation is a real point of differentiation for us and
will continue to be an integral focus.
Unlocking new
opportunities
34 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Unlocking new
opportunities
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 35
Sustainability
TWE is cultivating a brighter future and creating long-term value
by embedding sustainability into our business.
As the custodian of some of the world’s leading premium wines,
we recognise the leadership role we play in shaping a positive
future for everyone who touches our business and products.
This means being responsible in how we source and produce our wine,
and prioritising the wellbeing of our people, communities, and consumers.
OUR APPROACH
During the financial year, TWE launched its enhanced sustainability strategy and an expanded suite of targets
that respond to the topics that matter most to us and our stakeholders.
Our approach to sustainability is embedded in our Ambition and Game Plan and is driven by our TWE DNA. It reflects
a commitment to innovation and partnership as well as a commitment to sustainability leadership not just across
the global wine sector, but looking to those leading the beverages sector more broadly.
This bold ambition recognises that we need to take a more integrated approach to sustainability with a strong
focus on long-term value creation and leading collective action in a way that helps us effectively manage risks
and make the most of new and emerging opportunities. We are also investing to ensure our data and systems
support this ambition.
Our sustainability strategy and programs are informed by relevant best practice initiatives and guidance
including the Global Reporting Initiative (GRI), the United Nations (UN) Global Compact and the UN
Sustainable Development Goals (SDGs).
Cultivating
a brighter future
F O S T E R I N G H E A LTHY AND
I N C L U S I V E C O M MUNITIES
C O N S U M E R
H E A L T H A N D
R E S P O N S I B L E
D R I N K I N G
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AND DIVERSITY
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36 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Our sustainability agenda has three focus areas:
BUILDING A RESILIENT BUSINESS
We want to ensure our business
is resilient in the face of increasing
uncertainty, complexity, and change.
FOSTERING HEALTHY
AND INCLUSIVE COMMUNITIES
We want to foster safe, sociable, and
connected communities where our
brands are promoted, and our wine
consumed, safely and responsibly.
PRODUCING SUSTAINABLE WINE
We want every consumer to
experience wine that is sustainably
grown, made, and packaged.
Transitional risks and opportunities arise from political,
legal, technological, and market responses to the
challenges posed by climate change and the
transition to a lower carbon economy. We continue
to monitor and understand emerging trends and
changing customer/consumer preferences.
We have begun to align our reporting with the
recommendations of the TCFD and in F20 we began
a two-year Climate Scenario Analysis to help us
understand what future trends, opportunities and risks
may emerge as a result of climate change and their
potential financial and operational impacts on our
business and its strategy.
For each of our key growing regions, we used a high
and low emissions scenario and identified a series
of hypotheses related to water availability, long-term
temperature and climate extremes that were modelled
over various time horizons (2030, 2050 and 2070). Early
in F22 we have begun to examine what these scenarios
mean for our business at some specific sites in order
to better understand our resilience and vulnerabilities
and assist in guiding the range of our opportunity, risk
mitigation, and adaptation responses. This work will
continue throughout F22.
GOVERNANCE AND REPORTING
The Sustainability Leadership Group (formerly known
as the Global CR Council) is the governing body
with oversight of our sustainability approach and
performance. The cross-functional group comprises
members from the Executive Leadership Team (ELT)
and senior representatives from functional areas of the
business and across our key geographies of operation.
TWE’s governance structure ensures that the Board
oversees TWE’s approach and management of
Environmental, Social & Governance (ESG) matters
and receives updates on sustainability and the status
of key priorities.
TWE’s reporting on ESG topics is captured in the
Company’s annual Sustainability Report, which
provides updates on progress and performance.
The Board has oversight of our key ESG disclosures,
including the Sustainability Report. The report will
be released later in 2021.
TASKFORCE ON CLIMATE-RELATED FINANCIAL
DISCLOSURES (TCFD)
TWE understands that as a global viticultural business,
we will be exposed to both physical and transitional
climate risks.
For TWE, the critical impacts of climate change are
more frequent extreme weather events and the
long-term risks resulting from climate pattern changes
such as changes in temperature patterns as well as
access to water.
Lindeman’s
STEPS INTO THE SUNSHINE
To celebrate Lindeman’s achieving its carbon
neutral status in Europe, the brand stepped into
summer with a new integrated marketing
campaign, ‘Step into The Sunshine’.
Part of this campaign included a ‘Buy one, plant
one tree’ in-store activation; for each bottle of
Lindeman’s sold, the brand pledges to plant a tree.
The aim is for Lindeman’s to plant an additional
370,000 trees.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 37
NAFEZ
JDE Functional Consultant Lead, ANZ
‘Working at TWE has been the first time I have
felt that I can be my true self at work. The people
at TWE are supportive and engaging and I love
being part of a company that allows its people
to grow.
I’ve been leading enterprise software
management for the company as a Functional
Consultant Lead and am privileged to work
with an amazing team around the globe.’
World-
class
talent
38 – TREASURY WINE ESTATES ANNUAL REPORT 2021
MARIA
Senior Director People and Culture, TWE America
‘TWE has given me the opportunity to learn
from the brightest in the industry, growing
professionally every day whilst having fun
in the process.
I’ve been in HR at TWE since 2016.
As part of my job I have the pleasure to
support our amazing teams in different
locations across the US.’
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 39
Diversity and inclusion
TWE is committed to upholding the International Bill of Human Rights,
the United Nations Guiding Principles on Business, and Human Rights
and Modern Slavery Acts. Our inclusion and diversity strategy is
underpinned by this commitment. At TWE we believe our strength
comes from our vast and varied backgrounds, ideas, cultures,
ethnicities, talents, genders, and voices: the things some see as
different, and that we see as critical to our success.
We are committed to creating an inclusive, supportive
and collaborative culture to attract and retain the
best possible talent, and to creating environments
where people from diverse backgrounds can fulfil
their potential.
The Board has committed to reviewing and assessing
progress against TWE’s diversity and inclusion
objectives. To that end, the Company is pleased to
report progress made in F21, together with the F22
measurable objectives.
The Company’s Diversity and Inclusion policy can be
found on the Company’s website: www tweglobal.com
F21 DIVERSITY TARGET AND OBJECTIVES
Recommendation 1.5 of the ASX Corporate Governance
Principles and Recommendations states that a
company’s board or board committee is to set the
measurable objectives for achieving gender diversity.
The diversity targets set by the Board for F21 were to:
1. increase female representation in leadership roles
to 50% by 2025; and
2. increase female representation across the total TWE
workforce to 42% by 2025.
The following diversity objectives were set by the Board
for F21.
1. Diverse workforce: strong workforce representation
so we can leverage talent as a competitive
advantage, creating value for our customers
and community.
2. Inclusive workplace: create a differentiated inclusive
culture where diverse and resilient talent can thrive
during ‘moments that matter’ to deliver business
outcomes that matter.
3. Employer of Choice: strong employer brand,
Employee Value Proposition, and improved business
outcomes that demonstrate return on investment
in human capital.
The CEO and all ELT members had a Diversity and
Inclusion Key Performance Objective (KPO) to deliver
the above objectives in F21.
40 – TREASURY WINE ESTATES ANNUAL REPORT 2021
F21 PROGRESS ON DIVERSITY TARGETS
As at 30 June 2021, TWE reached:
• 45.1% females in leadership roles compared to the
target of 50% by 2025 (up from 41.2% in F20); and
• 40.2% females in all roles compared to the target
of 42% by 2025 (up from 39.1% in F20).
F21 PROGRESS ON F21 DIVERSITY OBJECTIVES
The following highlights demonstrate progress made
against the F21 diversity and inclusion objectives.
Diverse workforce
• To invest in the capability of high potential female
employees and build the female succession pipeline
for leadership roles, we launched the ‘Empower Me’
talent program, including an initial intake of 25 females.
30% of program participants were promoted during
the course of the program.
• As part of working towards global alignment and
embedding our TWE DNA, we reviewed our support
to employees, resulting in the development of
‘Find Your Flex’, Family and Domestic Violence, and
Gender Affirmation policies. We also made significant
enhancements to the ANZ Parental Leave Policy,
including broadening eligibility criteria, lengthening
the period of paid leave, and the application
of superannuation contributions to a portion
of unpaid leave.
• To provide further support to parents and carers,
we established a global partnership with Circle In,
a personalised employee benefits platform that
helps our employees navigate the challenge of
working and caring for others.
• We further refined our approach to building gender
balance by expanding the global TWEforSHE
ambassador network to include male ambassadors
and reviewed gender pay equity to identify any pay
gaps in like-for-like roles.
• The Mary Penfold Award forms part of our commitment
to achieve gender equality at TWE by recognising
and celebrating outstanding women who have
made an exceptional impact in our business. The
winner of the 2021 annual award, Sharon Brown
(Customer Service Team Leader EMEA) stood out
as someone who demonstrated the leadership
qualities embodied by Mary Penfold in her time.
Inclusive workplace
• To better understand the employee experience
at TWE and identify areas for focus, we conducted
our first global inclusion survey as well as an all
employee survey. Our people told us they feel a
strong sense of belonging and connection to TWE
and understand how they contribute to our broader
purpose. We also heard there is an opportunity
for us to improve how we make decisions, including
providing context for those decisions and considering
the perspectives of our diverse team in the process,
as well as making sure internal career opportunities
are visible and we support our employees to undertake
learning and development.
• Our Employee Resource Groups (ERGs) create a
greater sense of inclusion, belonging and provide
support to employees who may be underrepresented
at TWE. As such we were pleased to support the
establishment of a number of new ERGs including:
– TWE Enable (Global) – improving accessibility
for all and raising awareness around visible and
invisible disability;
– TWE Mosaic (ANZ) – celebrating and raising
awareness around cultural diversity;
– The Guardians (AME) – providing support and
resources to parents and caregivers;
– La Raza (AME) – supporting members of the Latinx/
Hispanicx community to develop further and bring
their whole selves to work;
– Asian American Pacific Islanders (AAPI) (AME) –
supporting members of the AAPI community
to develop further and access support for
their wellbeing.
• We also held companywide events to raise
awareness of important inclusion and diversity
issues, including: International Human Rights
Campaign; 16 days of Activism against Gender
Based Violence; Indigenous Education sessions;
International Women’s Day; Taste of Harmony;
and Pride Month.
Employer of Choice
• We were invited to speak at, host and participate in
numerous industry events, including: Women in Wine;
The Colours of the Vine; D&I in Grocery; Out in the
Vineyards; and I&D Drinks Association.
• We were recognised as runner up in the 2021
Australian Financial Review BOSS Best Places to
Work (Manufacturing and Consumer Goods sector).
The assessment showed particular strengths
in Purpose, Flexibility, Wellbeing and Equality.
• In support of Diversity Council Australia’s
#IStandForRespect campaign, our CEO Tim Ford
signed a pledge to (i) stand against gendered
harassment and violence in all its forms and (ii)
commit to taking steps to address sexual and
sex-based harassment, to make the workplace
safe for everyone.
The ELT continued to operate as the Diversity Council in
F21 with a focus on leadership, setting appropriate goals
and targets, monitoring progress and driving action.
F22 OBJECTIVES AND INITIATIVES
During F21, we reviewed and revised our strategy to
create an Inclusion, Equity and Diversity (IE&D) strategy
focused on the three key pillars below.
1. Leaders who model our DNA: leaders who
steadfastly role-model and lead inclusion and have
a true understanding of employee experience and
culture, enabled by world-class leadership and
development programs.
2. Engaged employees, consumers and communities:
employees who bring their whole selves to work;
consumers who recognise our commitment to
inclusion and diversity through our brands; and
partnerships with purpose-aligned communities and
suppliers.
3. Employer of choice: industry leading policies and
work processes to maximise inclusion and minimise
bias; innovation optimised through team contribution
and data informed plans and allocation of resources.
The strategy continues to be underpinned by our
commitment to upholding the International Bill of
Human Rights, the United Nations Guiding Principles on
Business, and Human Rights and Modern Slavery Acts.
The ELT is committed to continuing TWE’s Diversity
Council, with accountability for setting the strategy
and defining and managing TWE’s diversity and
inclusion goals and objectives.
The Company continues to strive towards the
following targets:
• increase female representation in leadership roles
to 50% by 2025;
• increase female representation across the total
TWE workforce to 42% by 2025; and
• continuing to foster an inclusive and equitable culture.
The following high priority initiatives are planned
to build on the Company’s achievements in F21.
• Defining inclusive leadership expectations and
investment in inclusive capabilities.
• ELT and Senior Leaders expected to role model and
promote inclusive behaviours that will be included
in 360 degree feedback and performance reviews.
• Reverse mentoring for ELT and selected Senior
Leaders, enabling enhanced IE&D understanding
and leadership.
• IE&D manifesto developed and launched.
• Specific people processes reviewed and improved
to minimise bias and maximise inclusion.
The CEO and all ELT members have a Leadership,
Inclusion, Equity and Diversity KPO to deliver the above
objectives in F22.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 41
DIVERSITY AND INCLUSION (CONTINUED)
BOARD DIVERSITY OBJECTIVE
ORGANISATIONAL GENDER PROFILE
The Board is committed to ensuring it is comprised
of individuals with appropriate skills, experience and
diversity to develop and support the Company’s
strategic imperatives. The Board recognises the
importance of cultural, geographic and gender
diversity amongst its members, which is reflected
in the current representation on the Board, with four
non-executive directors based offshore in regions
in which the Company operates.
Currently women continue to represent 44.4% of the
Board as at the date of this report. The Board continues
to maintain the objective that at least 30% of its
directors will be of either gender, to maintain gender
diversity in its composition.
The Company makes the following diversity disclosures
in relation to Recommendation 1.5 of the ASX Corporate
Governance Principles and Recommendations.
As an Australian based business, the Company complies
with the Workplace Gender Equality Act which requires
annual filings to the Australian Workplace Gender Equality
Agency (WGEA) disclosing ‘Gender Equality Indicators’. This
report, covering the 12-month period ending 31 March, was
published on the WGEA and the TWE websites in July 2021:
https//wwwtweglobal.com/careers/diversity-inclusion.
Recommendation 1.5 Requirement
Proportion of women in the
whole organisation
Proportion of women in
senior executive
within the Company
1
positions
As at 30 June 2021, 40.2% of the Company’s employees were women.
As at 30 June 2021, 36.4% of the senior executive positions within the Company were
held by women.
Proportion of women on the
Board of the Company
As at 30 June 2021, 44.4% of the Company’s Board of Directors (including executive
directors) were women.
The Board is committed to ensuring that it is comprised of individuals with appropriate
skills, experience, and diversity to develop and support the Company’s strategic aims.
The Board continues to maintain the objective that at least 30% of its directors will be
of either gender, to maintain gender diversity in its composition.
Further details are set out in the Corporate Governance section of the Annual Report.
1. For the purposes of this disclosure, the Company has defined ‘senior executive’ as the Chief Executive Officer and their direct reports.
To note, using the TWE definition of leader, 45.1% of roles were held by women as at 30 June 2021.
Coastal Reserve
NEW BRAND LAUNCH
In the United Kingdom and Europe, we launched
Coastal Reserve, an ethically minded, on-trade
exclusive range of Vegan certified wines to provide
consumers with a sustainable choice on wine menus
in pubs and restaurants. As part of the launch, Coastal
Reserve partnered with not-for-profit organisation
Plastic Oceans Europe, to focus on raising awareness
around its sustainable efforts and take a step in the
right direction to reducing plastic pollution.
42 – TREASURY WINE ESTATES ANNUAL REPORT 2021
AWARDED ONE OF THE TOP PLACES TO WORK IN ANZ
We were thrilled to be recognised as one of the best places
to work from more than 1,000 nominated organisations across
Australia and New Zealand. This achievement is testament to
our 2,600 team members around the world and their focus on
building our culture right across the business. We’re proud of
the progressive and supportive culture we’re cultivating and
we continue to work together to empower team members to
bring their whole selves and be courageous at work.
Best
place
to work
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 43
Board of Directors
Member of the Board since May 2011 and Chairman of the Board and the Nominations Committee
since September 2012.
Mr Rayner is an independent Director and is an Australian resident.
He brings to the Board extensive international experience in markets relevant to Treasury Wine Estates
including Europe, North America, Asia, as well as Australia. He has worked in the fields of finance,
corporate transactions and general management in the consumer goods, manufacturing and
resource industries. His last role as an executive was as Finance Director of British American Tobacco
plc, based in London, from January 2002 to 2008.
Mr Rayner is also a director of Qantas Airways Limited (since July 2008 and where he also serves
as Chairman of the Remuneration Committee), Boral Limited (since September 2008 and where he
also serves as Chairman of the Audit Committee) and Murdoch Children’s Research Institute (since
December 2014 and where he also serves as Chairman of the Audit, Finance and Risk Committee).
Member of the Board since July 2020.
Mr Ford is an Australian resident and TWE’s Chief Executive Officer.
Since joining TWE in February 2011, Tim has held key roles across the business’s global operations,
including Director, Global Supply and Managing Director Europe, South East Asia, Middle East and
Africa, and Deputy Chief Operating Officer with responsibilities for Asia, Europe and the ANZ regions.
In January 2019 Tim was appointed Chief Operating Officer with responsibility for TWE’s global
operations, and took the helm as Chief Executive Officer on 1 July 2020.
Tim has more than 20 years’ experience in the wine, food and beverages sectors, with a strong
track record for disciplined execution of strategy, driving growth, and building high performing and
connected teams. Prior to joining TWE, he held senior management roles with National Foods and CUB.
Member of the Board since September 2012 and member of the Audit and Risk Committee.
Mr Chan is an independent Director and a Hong Kong resident.
He is currently a director of Hong Kong-listed LINK REIT (since February 2016) and Yum China Holdings,
Inc (since October 2016). He is also a Partner at Gaorong Capital (since July 2020).
Mr Chan is a former Operating Partner of SoftBank Investment Advisers (from June 2019 to June 2020),
the former Vice Chairman of Charoen Pokphand Group (from January 2012 to February 2018) and
a former director of Hong Kong-listed CP Lotus (from April 2012 to February 2018). From 2006 to 2011,
Mr Chan was the President and CEO of Wal-Mart China. He has also held senior positions with Dairy
Farm, including his last position as North Asia Regional Director, as well as leading the Bertelsmann
Music Group business in Greater China. Mr Chan began his career as a consultant with McKinsey & Co
working in both Hong Kong and the United States.
Member of the Board since December 2018.
Ms Cheang is an independent Director and a Hong Kong resident.
Ms Cheang is currently the Vice Chairman and Chief Executive of Hang Seng Bank, listed on the Stock
Exchange of Hong Kong Limited, and has had a successful career spanning a number of critical
leadership roles with the HSBC Group throughout the Asia Pacific region. She is also currently Group
General Manager of HSBC Holdings plc and a former director of The Hongkong and Shanghai Banking
Corporation (from September 2017 to August 2020).
Ms Cheang is also a member of key government advisory committees, notably The Twelfth Jiangsu
Provincial Committee of the Chinese People’s Political Consultative Conference, and the Consulting
Committee for the China (Guangdong) Pilot Free Trade Zone.
Paul Rayner
B.Ec, MAdmin, FAICD
Chairman
Tim Ford
BBus, MBA
Managing Director and
Chief Executive Officer
from July 2020
Ed Chan
B.A/Ec, MS
Non-executive Director
Louisa Cheang
B.Soc.Sc
Non-executive Director
Member of the Board since May 2011, Chairman of the Human Resources Committee and a member
of the Nominations Committee.
Mr Every-Burns is an independent Director and is an Australian resident.
He was Chief Executive Officer of Treasury Wine Estates on an interim basis from 23 September 2013
until 30 March 2014.
Mr Every-Burns previously worked for more than 30 years in the consumer packaged goods sector.
Most recently, he was President of International Business and a member of the Worldwide Executive
Committee of The Clorox Company, a NYSE listed, S&P 500 business. He was based at The Clorox
Company’s headquarters in the United States for more than five years. Mr Every-Burns began his
career at Unilever, is a former Managing Director of Glad Products of Australia and New Zealand,
and was formerly on the Advisory Council of the Frontier Strategy Group.
Mr Every-Burns is a director of The a2 Milk Company Limited (since August 2016).
Warwick Every-Burns
AMP, Harvard University
(Advanced Management Program)
Non-executive Director
44 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Member of the Board since September 2012, Chairman of the Audit and Risk Committee and
member of the Nominations Committee.
Mr Hounsell is an independent Director and is an Australian resident.
He is currently Chairman of Helloworld Travel Limited (since October 2016) and the Commonwealth
Superannuation Corporation Limited (since July 2021, and a director since July 2016). Mr Hounsell is
also a director of Findex Group Limited (since January 2020).
Mr Hounsell is a former Chairman of PanAust Limited (from July 2008 to August 2015), Myer Holdings
Limited (from November 2017 to October 2020, and a director from September 2017 to October 2020),
Spotless Group Holdings Limited (from February 2017 to August 2017, and a director from March 2014
to August 2017) and a former director of Qantas Airways Limited (from January 2005 to February 2015),
Integral Diagnostics Limited (from October 2015 to March 2017) and Dulux Group Limited (from July
2010 to December 2017), and has held senior positions at both Ernst & Young and Arthur Andersen.
Member of the Board since April 2018 and a member of the Human Resources Committee.
Ms Jay is an independent Director and an American resident.
Ms Jay has extensive experience in the fast-moving consumer goods industry, acquired over a long
and successful career at Procter & Gamble (P&G, NYSE: PG), an American multinational consumer
goods company, between 1985 and 2017. She has held a number of senior leadership roles at P&G,
including President of Global Retail Hair Care & Colour and her most recent position as President
of the US$5 billion Global Beauty Specialty business, where she also led a complex transition and
divestiture of several businesses.
Ms Jay has significant global experience having lived and worked in the United States, Europe, China
and Canada. Her leadership experience includes significant global line operational leadership,
strategy creation and execution, global brand building, new business development, transformational
innovation and M&A.
Ms Jay is currently an independent non-executive director of The Cooper Companies (NYSE: COO).
Member of the Board since April 2020 and member of the Audit and Risk Committee.
Ms Korsanos is an independent Director and an Australian resident.
Ms Korsanos has extensive senior executive, strategy, M&A, financial and governance experience,
acquired over a successful career as Chief Financial Officer of ASX-listed Aristocrat Leisure Limited
between 2009 and 2018, where she also served as Company Secretary from 2011. During her career
with Aristocrat, Ms Korsanos gained a significant understanding of the US market and regulatory
environment, and led a number of transformational cross-border acquisitions.
Prior to joining Aristocrat, Ms Korsanos held senior leadership roles in the fast-moving consumer
goods industry for a period of 10 years, including at Goodman Fielder and Kelloggs. Ms Korsanos
commenced her career with accounting firm Coopers & Lybrand (now PwC) and has been
a Chartered Accountant since 1994.
Ms Korsanos is currently an independent director of Crown Resorts Limited where she serves
as Chair of the Audit Committee and the People, Remuneration and Nomination Committee.
Ms Korsanos was also appointed to the Board of Scientific Games Corporation (NASDAQ: SGMS)
in September 2020. Ms Korsanos is a former director of Ardent Leisure Group Limited (from July 2018
to June 2020) and Webjet Limited (from June 2018 – March 2021).
Member of the Board since November 2016 and a member of the Human Resources Committee.
Ms Shanahan is an independent Director and an American resident.
Ms Shanahan has extensive retail, consumer brand, e-commerce and governance experience.
She has held senior executive positions, including as Chief Administrative Officer, Chief Legal Officer
and Corporate Secretary with The Gap Inc, where she was involved in leading the company’s
domestic and international expansion. Ms Shanahan also founded the consulting practice Maroon
Peak Advisors of which she is a Principal.
Ms Shanahan is currently a member of the California State Personnel Board and a director of Cedar
Fair Entertainment Company (NYSE: FUN), Deckers Outdoor Corporation (NYSE: DECK) and G Squared
Ascend (NYSE: GSQD.U).
Garry Hounsell
B.Bus (Acc), FCA, FAICD
Non-executive Director
Colleen Jay
B.BA (Hons)
Non-executive Director
Antonia Korsanos
BEC, CA, GAICD
Non-executive Director
Lauri Shanahan
JD Business Law, BS Finance
Non-executive Director
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 45
Corporate governance
The Board believes good corporate governance and
transparency in corporate reporting is a fundamental
part of the Company’s culture and business practices.
During the year, the Board continued to govern
the Company through the execution of its strategy.
Key governance issues for the Board during the
year are listed here.
• Guiding the Company through the uncertainty
created by COVID-19 and ensuring prompt and
transparent communication with investors and
stakeholders throughout the period.
• Providing input into and approval of the Company’s
restructure of its US business and the divestment
of key assets within this business.
• Providing input into, and approval of,
management’s development of the Company’s
new ambition, Game Plan and DNA, being the
Company’s core values.
• Guiding the Company through its response to
the China Ministry of Commerce investigation,
its preliminary and final determinations, and
the implementation of mitigating actions.
• Overseeing management’s assessment
of operating model opportunities to deliver
long-term value through a separate focus
across its brand portfolio and approving the
divisionalisation under which the Company will
operate under three separate brand led divisions.
• Setting a new sustainability ambition and targets
and continued commitment to the governance
of workplace health, safety and wellbeing
performance, and a culture of leadership
on safety across the business.
• Providing input into, and approval of, the TWE
2025 corporate strategy. Approving the annual
financial budget, and monitoring corporate
performance and the implementation of
strategy and policy.
• Oversight of management’s continued
commitment to a culture of high performance
and responsible conduct to lead the global
business. Setting remuneration policy to attract
and retain the best possible talent and reward
high performance and conduct that exemplifies
the Company’s DNA.
• Maintaining effective governance to facilitate
high-quality processes and internal controls.
INTRODUCTION
The Board is committed to conducting the Company’s
business ethically and responsibly and in accordance
with high standards of corporate governance. This
is essential for the long-term performance and
sustainability of the Company and to protect the
interests of its stakeholders.
To this end, the Board regularly reviews the charters
and key policies that underpin the Company’s
corporate governance practices to ensure they remain
appropriate, reflect high standards of governance and
meet regulatory requirements. During the financial
year, the Company’s governance practices complied
with the fourth edition of the ASX Corporate
Governance Principles and Recommendations
(ASX Principles and Recommendations).
This Corporate Governance section provides an
overview of the Board’s operations, details on the
governance framework and the key governance
focuses of the Board for the financial year.
The full Corporate Governance Statement, which
outlines the key aspects of the Company’s corporate
governance framework and practices for the year
ended 30 June 2021, together with the Appendix 4G
Key to Disclosures – Corporate Governance Council
Principles and Recommendations and key governance
documents, including the constitution, charters
and policies, are available on our website at
wwwtweglobal.com/investors/corporate-governance.
BOARD OF DIRECTORS
Members of the Board
The Board continues to comprise a majority of
independent directors with all directors, other than
the Chief Executive Officer (CEO), being independent
non-executive directors.
The Board is committed to ensuring it is comprised
of individuals with appropriate skills, experience and
diversity to develop and support the Company’s
ambition to be the world’s most admired premium
wine company, having regard to the five pillars of its
Game Plan. The Board utilises a skills matrix to assist in
assessing the mix of skills, experience and diversity on
the Board, and to identify areas of focus to supplement
the mix of skills and experience as part of Board
succession planning. Each director annually rates their
skills, expertise and experience from 1 to 3 for each
competency identified in the Board skills matrix
(1 = working knowledge, 2 = good understanding,
and 3 = expert). The self-assessment ratings are
subsequently calibrated and included in the Board
skills matrix.
The Board considers that its members collectively
possess the appropriate competencies and
attributes that enable the Board to discharge
its responsibilities effectively, contribute to the
Company’s strategic direction and oversee the
delivery of its corporate objectives.
46 – TREASURY WINE ESTATES ANNUAL REPORT 2021
TWE Ambition To be the world’s most admired premium wine company
The Company’s Game Plan is set out in Table 1. A summary of the Company’s Board skills matrix is included in Table 2.
TWE Way We boldly lead change in the world of wine
Table 1: TWE Game Plan
TWE GameGameG
TWE Game PLAN
PLAN
OUR PLAN ON A PAGE
Consumer focused
Consumer focused
premium brand
premium brand
portfolio
portfolio
Multi-regional
Multi-regional
& multi-channel
& multi-channel
sales models
sales models
World-class talent
World-class talent
Sustainable &
Sustainable &
multi-regional
multi-regional
sourcing &
sourcing &
winemaking
winemaking
Deep, long-term
Deep, long-term
partnerships
partnerships
& networks
& networks
Table 2: TWE Board skills matrix
TWE
Board skills and experience
We bring our whole self
We are courageous
Expert
Good
We deliver together
understanding
Working
knowledge
No. of directors (total of 9)
Industry
Expertise and experience in the wine or alcohol industry, consumer
marketing or supply and distribution
Business strategy development and M&A
Demonstrated ability to build, develop, implement and deliver
strategic business objectives, including sustainability objectives
and/or experience in corporate transactions and joint ventures
Finance and business
Proficiency in financial accounting and reporting, corporate finance
and internal controls, corporate funding, capital management and
associated risks
Governance, regulatory and human capital
Expertise identifying and managing legal, regulatory, governance,
public policy and corporate affairs issues; experience in complex
human capital and remuneration issues and understanding of the
link between strategy, performance and remuneration outcomes
Risk management
Experience anticipating and identifying risks and monitoring
the effectiveness of both financial and non-financial risk management
frameworks and controls; extensive experience with complex workplace
health, safety, environmental and community risks and frameworks
Technology
Expertise and experience in the adoption and implementation
of new technology, including IT infrastructure; understanding
of key factors relevant to digital disruption, including opportunities to
leverage digital technologies and cyber security; and understanding
the use of data and analytics
Innovation
Expertise in and understanding of key factors relevant to digital
disruption and innovation; experience in the creation and delivery
of new ways of working and commercial initiatives
International
Relevant experience in regions and countries related to the
Company’s strategy and activities, including USA, Asia, and EMEA
Board or senior management experience
Chairman – listed company
CEO/senior management
3
3
3
3
4
1
3
6
Yes
2
9
5
6
6
6
5
5
5
3
1
0
0
0
0
3
1
0
No
7
0
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 47
ROLE OF THE BOARD
The responsibilities of the Board as set out in the Board
Charter include the following.
Strategic guidance and effective oversight
of management
• Providing input into, and approval of, the Company’s
corporate strategy, performance objectives, and
business plans as developed by management.
• Appointing the CEO and managing succession
planning, as well as overseeing changes to the
Executive Leadership Team, with a view to ensuring
senior management has the appropriate resources
to enable implementation of the Company’s
strategic initiatives.
• Directing, monitoring and assessing the Company’s
performance against strategic and business plans.
• Approving and monitoring capital management,
including major capital expenditure, acquisitions,
and divestments.
Risk assessment and management
• Reviewing and evaluating the integrity of the
Company’s systems of risk management (for both
financial and non-financial risks), legal compliance,
and internal compliance and control.
• Reviewing and approving the Company’s risk
appetite statement.
Obligations to stakeholders
• Monitoring and reviewing processes aimed at
ensuring integrity of financial and other reporting.
• Monitoring compliance with adopted strategies,
procedures and standards, including corporate
governance standards.
CORPORATE GOVERNANCE (CONTINUED)
The Board recognises the importance of cultural,
geographic and gender diversity amongst its members,
which is reflected in the current representation on the
Board, with four non-executive directors based offshore
in regions in which the Company operates. The Board
considers that it also has an appropriate mix of
director tenure, with its members ranging from newly
appointed to longer standing directors. As at June 2021,
the average tenure for the Company’s non-executive
directors was 6.2 years.
In order to maintain gender diversity in the composition
of the Board, in 2019 the Board set itself a measurable
objective that at least 30% of its directors will be of
each gender going forward. Since the appointment
of Antonia Korsanos on 1 April 2020, women represent
44.4% of the Board. In order to maintain gender
diversity into the future, in 2021 the Board has set itself
a measurable objective to maintain at least 30%
of each gender going forward.
The Board is committed to ensuring its performance
is enhanced through its director induction and ongoing
education program. The Board’s ongoing education
incorporates site visits and presentations given
by management and external parties concerning
developments impacting, or likely to impact,
the business.
Independence
The Board, having reviewed the position, interests
and relationships of all non-executive directors
currently in office, considers that all non-executive
directors are independent.
During the year, non-executive directors met
periodically without the presence of management to
have the opportunity to discuss key matters amongst
the non-executive directors.
Annual director elections
Under the Constitution of the Company, non-executive
directors are required to retire and may seek
re-election, at least every three years. However,
having regard to the global nature of the Company,
emerging governance requirements in key markets,
the inherent benefits for Board renewal and to ensure
accountability of directors, in 2019 the Board adopted
a policy pursuant to which all non-executive directors
will seek re-election annually.
48 – TREASURY WINE ESTATES ANNUAL REPORT 2021
BOARD COMMITTEES
Three standing Board Committees have been established to assist the Board in fulfilling its responsibilities.
Board of Directors
Audit & Risk Committee
Nominations Committee
Human Resources Committee
Oversees: financial reporting, risk
management and internal controls,
external and internal audit, capital
management, and compliance.
Oversees: Board composition,
performance of the Board, Board
Committees and individual directors,
as well as succession planning.
Key focuses for F21:
Key focuses for F21:
• Assessing the competencies of the
directors to ensure the appropriate
range of skills and expertise
amongst Board members.
• Board succession planning,
including the adoption of a
revised Board skills matrix.
• Overseeing the internally
facilitated review of the
performance of individual
directors, the Board as a whole
and the operation of the Board
Committees.
• Assessing the independence
of directors and suitability
of director candidates for
re-election.
• Reviewing the scope of the
annual internal and external
audit programs and overseeing
the conduct and coordination
of those programs, as well as the
performance and independence
of the internal and external auditors.
• Reviewing significant accounting
and financial reporting related
matters raised by management
and the auditors.
• Reviewing workplace health and
safety, environmental, litigation
and compliance matters across
the Company.
• Reviewing whistleblower matters
reported across the Company.
• Monitoring the Company’s
insurance renewal program.
• Reviewing and recommending
to the Board for approval the full
year and interim financial reports.
Oversees: training, development
and succession planning for senior
management, Company’s diversity
policy, evaluation of senior executive
performance, and remuneration
and non-executive directors’ fees.
Key focuses for F21:
• Reviewing and revising
remuneration practices for F22
to ensure alignment with the
Company’s DNA and to provide
for the reward and retention
of key talent.
• Reviewing and approving the
fixed remuneration and incentive
compensation arrangements
for senior executives, including
reviewing the attainment of
short-term incentive (STI) and
long-term incentive (LTI)
performance conditions.
• Reviewing and recommending
to the Board for approval
the Company’s F21
Remuneration Report.
• Approving the terms
of engagement of the
remuneration consultant.
GOVERNANCE POLICIES
The Company has a number of governance policies
which guide how it does business, including:
• Code of Conduct, which recognises that the
Company’s reputation is one of its most valuable
assets, founded on the ethical and responsible
behaviour of the people who represent the Company;
• Disclosure Policy, which recognises the importance
of timely disclosure of the Company’s activities
to shareholders and market participants so that
trading in the Company’s shares takes place
in an informed market;
• Anti-bribery and Corruption Policy, which supports
the Company’s commitment to countering bribery
and corruption in all forms and confirms that the
Company does not tolerate any form of bribery
and corruption;
• Whistleblower Policy, which promotes and supports
the Company’s culture of honest and ethical
behaviour by encouraging the reporting of
suspected or actual unethical, illegal, corrupt
or fraudulent behaviour, or any other matter that
may contravene the Company’s Code of Conduct
or other policies or the law;
• Potential Conflicts of Interest Policy, which guides
the disclosure and management of potential
conflicts of interest;
• Share Trading Policy, which prohibits trading in the
Company’s shares by directors and employees if
they are in possession of ‘inside information’ and
provides for trading windows during which directors
and employees may trade subject to any required
approvals being obtained; and
• Risk Management Policy, as well as a Risk
Management Framework, which provide guidance
and direction on the management of risk in the
Company and state the Company’s commitment
to the ongoing development of a strategic and
consistent company wide approach to risk
management, underpinned by a risk aware culture.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 49
Directors’ Report
The directors of Treasury Wine Estates Limited (the
Company) present their report together with the
financial report for the Company and its controlled
entities (the Group) for the financial year ended
30 June 2021 and the auditor’s report.
The following sections of the Annual Report are
part of, and are to be read in conjunction with,
this Directors’ Report:
• Operating and Financial Review (OFR)
• Board of Directors
• Remuneration Report
PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial
year were viticulture and winemaking, and the
marketing, sale and distribution of wine.
STATUTORY INFORMATION
The Group’s consolidated financial statements have
been presented for the financial year ended 30 June
2021 and appear on pages 74 to 128.
DIRECTORS’ MEETINGS
DIRECTORS
The directors of the Company during the financial year
and up to the date of this report are:
Warwick Every-Burns
Paul Rayner
Ed Chan
Garry Hounsell
Lauri Shanahan
Colleen Jay
Louisa Cheang
Antonia Korsanos
Timothy Ford
(Chief Executive Officer)
Date of appointment
9 May 2011
9 May 2011
1 September 2012
1 September 2012
1 November 2016
1 April 2018
1 December 2018
1 April 2020
1 July 2020
Particulars of the current directors’ qualifications,
experience and Board Committee responsibilities
are detailed in the Board of Directors section of this
Annual Report.
The number of Board and Board Committee meetings and the number of meetings attended by each of the
directors of the Company during the financial year are listed below.
Meetings held during 2021 financial year
Board
meetings
1
Audit and Risk
Committee
meetings
1
Human Resources
Committee
meetings
1
Nominations
Committee
meetings
1
Additional
meetings
2
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Attended
Paul Rayner
Tim Ford
Ed Chan
Louisa Cheang
Warwick Every-Burns
Garry Hounsell
Colleen Jay
Antonia Korsanos
Lauri Shanahan
19
19
19
19
19
19
19
19
19
19
19
19
153
19
19
19
184
19
–
–
4
–
–
4
–
4
–
–
–
4
–
–
4
–
4
–
–
–
–
–
8
–
8
–
8
–
–
–
–
8
–
8
–
8
5
–
–
–
5
5
–
–
–
5
–
–
–
5
5
–
–
–
10
10
1
–
–
8
–
2
1
1. Shows the number of meetings held and attended by each director during the period that the director was a member of the Board or
Committee. Directors who are not members of Board Committees do attend Committee meetings from time to time. The above table reflects
the meeting attendance of directors who are members of the relevant Committee(s).
2. Reflects the number of additional formal meetings attended during the financial year by each director, including Committee meetings
(other than Audit and Risk Committee, Human Resources Committee or Nominations Committee) where any two directors are required
to form a quorum.
3. This number reflects Ms Cheang’s absence from four Board meetings due to a Board approved leave of absence.
4. This number reflects Ms Korsanos’s absence from one Board meeting held early in F21 due to a prior commitment scheduled before her
appointment to the Company’s Board.
50 – TREASURY WINE ESTATES ANNUAL REPORT 2021
15 cents
$108.2
ENVIRONMENTAL REGULATION
DIRECTORS’ INTERESTS IN SHARE CAPITAL
The relevant interest of each director in the share
capital of the Company as at the date of this report
is disclosed in the Remuneration Report.
COMPANY SECRETARY
The Chief Corporate Services Officer and Company
Secretary is Kirsten Gray BA/LLB (Hons), PDM. She has
been the Company Secretary since 23 March 2020.
Ms Gray is an experienced executive with deep
commercial, legal and governance expertise. Ms Gray
began her career as a corporate lawyer with Allens
Australia, following which she held senior global
positions in various top ASX-listed companies including
the BHP Group and Orica.
DIVIDENDS
Interim dividend: the Company paid an interim
dividend of 15 cents per ordinary share on 1 April 2021.
The dividend was fully franked.
Final dividend: since the end of the financial year, the
directors have approved a final dividend of 13 cents
per share, fully franked and payable on 1 October 2021.
The record date for entitlement to this dividend is
2 September 2021.
In summary:
Interim dividend paid
on 1 April 2021
Final dividend payable
on 1 October 2021
Total
Dividend per share
$m
13 cents
$93.8
28 cents
$202.0
The Company paid shareholders a final dividend in
respect of the 2020 financial year of $57.7 million.
REVIEW AND RESULTS OF OPERATIONS
Information on the operations and financial position
for TWE is set out in the OFR accompanying this
Directors’ Report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the financial year the Company’s state of
affairs was significantly impacted by COVID-19, the
announcement of the Company’s new divisional
operating model, the divestment of a significant
portion of its US commercial wine business and the
release by MOFCOM of the final determination in its
anti-dumping and countervailing investigations into
certain Australian wine exports into China. The nature
of these impacts have been discussed in various ASX
announcements made by TWE. Further information
regarding these impacts on TWE can be found in the
OFR, in the Company’s 2021 Annual Report.
BUSINESS STRATEGIES, PROSPECTS AND
LIKELY DEVELOPMENTS
The OFR sets out information on TWE’s business
strategies and prospects for future financial years
and refers to likely developments in the Company’s
operations and the expected results of those
operations in future financial years.
EVENTS SUBSEQUENT TO BALANCE DATE
Other than as disclosed in the financial statements, the
directors are not aware of any matters or circumstances
that have arisen since the end of the financial year
which have significantly affected or may significantly
affect the operations of the Group, the results of those
operations or the state of affairs of the Group in
subsequent financial years.
SUSTAINABILITY
Matters of environmental and social significance to the
Group are primarily addressed within the sustainability
framework. This framework is governed by the
Sustainability Leadership Group (formerly known as the
Global CR Council), comprising members from the
Executive Leadership Team and senior representatives
from regional and functional areas of the business.
Further detail on the Group’s sustainability framework,
initiatives and achievements are detailed in the
Sustainability section of this Annual Report and the
Company’s most recent Sustainability Report.
The Group is subject to various environmental laws and
regulatory frameworks governing energy, water, waste
and greenhouse gas reporting for its operations globally.
Management of environmental issues is a core
element of the work program delivered by sustainability
and technical teams and is detailed in the relevant
material business risks outlined in the OFR.
The Group recognises the direct link between effective
management of its environmental impacts and its
business success. To this end, the Group’s environment
policies, procedures and practices are designed to
ensure that the Group maintains focus on resource
efficiency and continuous improvement, and that
environmental laws and permit conditions are
complied with. Compliance with these regulatory and
operational programs has been incorporated into
relevant business practices and processes.
The Group monitors its operations through a Health,
Safety and Environment (HSE) Management System,
overlaid with a risk management and compliance
system overseen by the Audit and Risk Committee.
The Sustainability Leadership Group provides oversight
of the Group’s strategic approach to managing the
environmental challenges it faces. Although the
Group’s various operations involve relatively low
inherent environmental compliance risk, matters
of non-compliance are identified from time-to-time
and are corrected. Where required, the appropriate
regulatory authority is notified.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 51
INDEMNITIES AND INSURANCE
Rule 40 of the Company’s Constitution provides that
the Company must, to the extent permitted by and
subject to the Corporations Act 2001 (Cth), indemnify
each officer, director and Company Secretary of
a Group company in respect of any liability, loss,
damage, cost or expense incurred or suffered or
to be incurred or suffered by the officer, director or
Company Secretary in or arising out of the conduct
of any activity of the relevant Group company or the
proper performance of any duty of that officer, director
or Company Secretary.
Each director of Treasury Wine Estates Limited has
entered into a Deed of Indemnity, Insurance and
Access (Deed) with the Company. No director or officer
of the Company has received a benefit under an
indemnity from the Company during the period
ended 30 June 2021 or to the date of this report.
In accordance with the Company’s Constitution and
the Deed, the Company has paid a premium in respect
of an insurance contract that covers directors and
officers of the Group companies. Due to confidentiality
undertakings of the policy, no further details in respect
of the premium or the policy can be disclosed.
ROUNDING
Treasury Wine Estates Limited is a company of the kind
referred to in ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191 and, except
where otherwise stated, amounts in the statutory
financial statements forming part of this report have
been rounded off to the nearest one hundred thousand
dollars or to zero where the amount is $50,000 or less.
This report is made on 19 August 2021, in accordance
with a resolution of the directors.
Paul Rayner
Chairman
Timothy Ford
Chief Executive Officer
DIRECTORS’ REPORT (CONTINUED)
Under the compliance system, the Audit and Risk
Committee receive six-monthly reports detailing any
matters involving non-compliance and potential
non-compliance. These reports also detail the
corrective action that has been taken.
Under the National Greenhouse and Energy Reporting
Act 2007 (Cth) (NGER Act), the Company is required to
report on its Australian operations that exceed specific
greenhouse gas emissions or energy-use thresholds.
The Company submitted its annual NGER Act report by
the prescribed reporting date of 31 October 2020.
During the financial year, the Group has not been
convicted of any significant breaches of
environmental regulation.
PROCEEDINGS ON BEHALF OF THE COMPANY
There are no proceedings brought or intervened in, or
applications to bring or intervene in proceedings, on
behalf of the Company by a member or other person
entitled to do so under section 237 of the Corporations
Act 2001 (Cth).
NON-AUDIT SERVICES AND AUDITOR INDEPENDENCE
KPMG is the Company’s auditor, appointed with effect
from 23 October 2013.
The Group may decide to engage the auditor, KPMG,
on assignments additional to their statutory audit
duties where such services are not in conflict with their
role as auditor and their expertise and/or detailed
experience with the Company may allow cost
efficiencies for the work.
The Board has considered the position and, in
accordance with advice received from the Audit
and Risk Committee, is satisfied that the provision
of non-audit services by KPMG is compatible with
the general standard of independence for auditors
imposed by the Corporations Act 2001 (Cth). The Board
also notes that:
• the engagements for all non-audit services have
been reviewed by the Chief Financial Officer, and
where relevant, the Chair of the Audit and Risk
Committee in accordance with the Committee’s
rules of engagement regarding the provision of
non-audit services by the External Auditor contained
in the Committee Charter to ensure they do not
impact the actual or perceived impartiality and
objectivity of KPMG; and
• none of the services provided by KPMG undermine
the general principles relating to auditor
independence as set out in APES 110 Code of Ethics
for Professional Accountants.
During the financial year, the fees paid or payable for
non-audit services provided by KPMG and its related
practices totalled $439,280. Amounts paid or payable
for audit and non-audit services are disclosed in
note 31 of the Financial Statements.
A copy of the auditor’s independence declaration
is set out on page 53 and forms part of this report.
52 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Auditor’s independence declaration
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Treasury Wine Estates Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Treasury Wine Estates
Limited for the financial year ended 30 June 2021 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
Gordon Sangster
Partner
Melbourne
19 August 2021
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 53
F21 Remuneration Report
CONTENTS
Executive remuneration
Key messages
Page 55
Non-executive director
remuneration
Other remuneration
information
Remuneration strategy
and framework
Page 57
Performance and
remuneration outcomes
Page 62
Framework and outcomes Page 68
Governance
Page 70
Further information
Page 72
EXECUTIVE REMUNERATION
Introduction from the Chairman of the Human Resources Committee
Dear Shareholders,
On behalf of the Board, I am pleased to present our F21
remuneration report for which we will seek your approval
at our Annual General Meeting in October 2021. The
remuneration report is designed to demonstrate the
Company’s performance, executive reward framework
and outcomes, and their strong alignment with our
strategic objectives and shareholder interests.
TWE’s remuneration practices are designed to attract,
motivate and retain the high-calibre talent needed to
deliver sustainable results that out-perform the market
over the long term.
While F21 was a challenging year for the Company, the
Board is immensely proud of the outstanding execution
and organisational resilience our team demonstrated
despite significant disruption, including ongoing impacts
from the global pandemic, the Californian wildfires and
the introduction of unprecedented import duties on
Australian wine by MOFCOM. Our response plan to mitigate
impacts of the MOFCOM tariffs are proving successful
with highlights including the delivery of incremental
growth for Penfolds Bin and Icon ranges in key Asian
markets outside of China, accelerated investment in
sales and marketing capability in priority growth markets,
and the establishment of new multi country of origin
propositions including the Penfolds California Collection.
Despite these extraordinary headwinds, we have reported
EBITS1 of $510.3 million which is in line with prior year. On an
organic basis, EBITS increased by 3.5%. ROCE improved
from 10.2%2 in F20 to 10.8% which remains ahead of our
weighted cost of capital. Our EBITS margin for F21
increased by 0.6 percentage points to 19.9%, and the
Company’s Total Shareholder Return performance
declined in light of the disproportionate impacts on our
business. The Company’s capital structure remains strong,
flexible and efficient. We have retained a strong, flexible
balance sheet and investment grade capital structure,
with net debt3 reducing by $376.5 million in F21 and net
debt/EBITDAS significantly improving to 1.6x from 2.1x in F20.
The remuneration outcomes for F21 reflect an appropriate
alignment between pay, TWE’s strategic objectives,
financial performance and shareholder returns. The
unanticipated external forces on our performance have
impacted remuneration outcomes for our executives.
No short-term incentives were paid in F21 for the F20 year
and fixed remuneration for all executives was frozen
during F21. Our long-term incentive plans have not vested
for the second year in a row.
F21 Short Term Incentive Plan (STIP) targets were initially
set in the context of our roadmap out of COVID-19, easing
of government mandated restrictions and travel and
economic recovery in our key markets. The MOFCOM
announcement in August 2020 had a significant and
unanticipated impact on our performance and was
outside of our executives’ control. As foreshadowed in the
F20 Remuneration Report, the Board carefully evaluated
F21 STIP targets during the year and as a result, the
targets were adjusted mid-year. This was imperative to
enable us to achieve a balance between appropriately
motivating and rewarding our executives for results
delivered in extenuating circumstances, and setting the
Company up for long term growth and returns for our
shareholders. When setting the adjusted targets,
the impact caused by the loss of shipments to China
was removed; however, executives were then tasked with
aggressive, stretch goals such as driving growth in other
markets and savings to mitigate the overall impact as well
as focus on delivering growth in earnings. The Company
has delivered exceptionally well against these revised
targets and has partially offset some of the MOFCOM
impacts as well as the ongoing adverse COVID-19
impacts. We remain confident our talent, business model
and remuneration policies and framework will return us
to long-term value creation into the future.
The Committee is responsible for oversight of other
Human Resources matters across the Company,
including diversity and inclusion, talent development
and succession, culture and engagement. It remains our
intention to encourage open dialogue with shareholders
and other stakeholders, and accordingly I welcome any
feedback and comments you may have.
Yours sincerely,
Warwick Every-Burns
Human Resources Committee Chairman
1. Earnings before interest, tax, SGARA and material items.
2. Prior year results for EBITS, Earnings per Share and ROCE have been restated for changes in accounting policies. Refer to Note 32 of the Financial
Statements for further information.
3. Net debt excludes fair value adjustments related to derivatives that are in a fair value hedge relationship on a portion of US Private Placement
Notes: F21 +$21.6 million, F20 +$41.7 million.
54 – TREASURY WINE ESTATES ANNUAL REPORT 2021
d) Short-term incentives in the year
F21 STIP targets were set in the context of our roadmap out
of COVID-19, easing of government mandated restrictions
and travel, and economic recovery in our key markets. The
MOFCOM announcement in August 2020 was a material
uncontrollable event and had a significant impact on
our performance. As outlined previously, F21 STIP targets
were reviewed and adjusted after the first half of F21
to achieve a balance between appropriately motivating
and rewarding our executives for results delivered in
extenuating circumstances, and setting up TWE for long
term growth and returns for our shareholders. When
setting the adjusted targets, the impact caused by
the loss of shipments to China was removed, however,
executives were then tasked with aggressive, stretch
goals such as driving growth in other markets and savings
to mitigate the overall impact and to focus on delivering
growth in earnings. These opportunities also assisted
in offsetting ongoing adverse COVID-19 impacts.
We continue the focus on our premiumisation strategy
and our global response plan to mitigate impacts from
the measures implemented by MOFCOM continues
to progress.
Whilst the company achieved above target performance
against the revised STIP targets, the Board has determined
that the F21 STIP Balanced Scorecard multiplier for executives
will be paid at 1.0x (on target). When taking into account
each executive’s Individual Performance Multiplier based on
their achievement of individual Key Performance Objectives
(KPOs) and demonstration of the Company’s DNA, the F21
STIP outcomes are 86.5% of fixed remuneration for Mr Young
and 73.2% of fixed remuneration for Mr Boxer. The CEO
received a STIP outcome of 108.3% of fixed remuneration.
e) Long-term incentives in the year
Whilst the Company has focused on sustainable earnings,
cost management and operational effectiveness during
the pandemic and following the introduction of the
MOFCOM tariffs, the subsequent financial impacts have
had an impact on long-term incentive plans (LTIP). The
Company’s Total Shareholder Return (TSR) performance
was at the 15.8th percentile relative to its peer group while
ROCE results, impacted significantly by the COVID-19
pandemic and the MOFCOM tariffs, were also below
threshold. Targets were not met and the Board elected not
to apply discretion to the F19 LTIP, which resulted in nil
vesting for eligible executives.
1. KEY MESSAGES
This report details the F21 remuneration framework
and outcomes for the Key Management Personnel (KMP)
of the Company which includes non-executive directors.
In this report, ‘executives’ refers to executives identified as
KMP excluding the non-executive directors. It is prepared
in accordance with the requirements of the Corporations
Act 2001 (Cth) and all references are to Australian dollars
($) unless otherwise specified.
a) Financial results for F21
Like many organisations, TWE experienced a challenging
year in F21. We demonstrated outstanding execution
and organisational resilience despite a year of significant
disruption, including ongoing impacts from the global
pandemic, the Californian wildfires and the introduction
of import duties on Australian wine by MOFCOM, and
delivered top-line growth in Asian markets outside of
China, the Americas, ANZ and EMEA. We delivered EBITS
of $510.3 million which was in line with prior year, and
on an organic basis, was a 3.5% increase. EBITS margin
increased 0.6 percentage points to 19.9%. TWE delivered
Earnings per Share (EPS) of 42.9 cents per share (before
material items and SGARA) whilst Return on Capital
Employed (ROCE) improved from F20 at 10.8%.
b) KMP
Executive KMP at TWE during F21 are as follows:
Executives (as at 30 June 2021)
Current KMP
TM Ford
Chief Executive Officer (CEO)
Full Year
MJ Young
Chief Financial Officer (CFO)
Full Year
SR Boxer
Chief Strategy and Corporate
Development Officer (CSCDO)
Full Year
Former KMP
MA Clarke
Former Chief Executive Officer
Ceased
1 July 2020
From 1 July 2020, Michael Clarke ceased as an Executive
KMP, Tim Ford commenced as CEO, and Stuart Boxer,
CSCDO, became Executive KMP.
c) Fixed Remuneration
TWE is a truly global company with significant growth
increasing the responsibility and complexity of executive
roles. The executive team has been crucial to the successful
navigation of COVID-19 and the tariffs imposed on Australian
wine by MOFCOM. The reward, retention and development
of this team is a key consideration of the Board.
There were no adjustments to fixed remuneration for
any executives during F21. To align executive remuneration
with market benchmark data (provided by independent
external consultants), for F22 the Board has approved
a 5% increase to Mr Ford’s remuneration to $1,575,000,
a 5% increase to Mr Young’s remuneration to $749,700
and a 2.5% increase to Mr Boxer’s remuneration to $691,875,
effective 1 September 2021.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 55
F21 REMUNERATION REPORT (CONTINUED)
f) Changes for F22
F22 LTIP
In the F22 LTIP, the weighting of the two metrics remain unchanged from the F21 LTIP with ROCE weighted at 75% of the plan
and Relative Total Shareholder Return (TSR) weighted at 25%.
The following targets have been set for the F22 LTIP.
ROCE growth will be measured against the F21 ROCE base of 10.8% and will vest according to the following schedule.
ROCE baseline
10.8% (F21)
% points ROCE growth
ROCE result
% of Performance Rights subject
to ROCE measure which vest
Less than 1.8
1.8 to 2.1
2.1 to 2.8
Less than 12.6%
12.6% to 12.9%
12.9% to 13.6%
At or above 2.8
At or above 13.6%
0%
35-75%
75-100%
100%
The relative TSR vesting schedule for the F22 LTIP has changed from F21 in that vesting has increased from 35% to 50%
if TWE’s ranking is at the 50th percentile. This change reflects common market practice but will not significantly alter
outcomes for executives. Full vesting of the relative TSR metric will still require a ranking at or above the 75th percentile.
Relative TSR
Vesting Schedule
Relative TSR Ranking
% of Performance Rights subject
to relative TSR measure which vest
Below 50th percentile
50th to 60th percentile
60th to 75th percentile
0%
50-70%
70-100%
At or above 75th percentile
100%
The peer group for relative TSR comprises companies within the S&P/ASX 200 Index, excluding companies from the energy,
metal and mining, real estate and finance sectors.
The Board has the discretion to adjust hurdles or vesting outcomes to ensure that executives are neither penalised nor
provided with a windfall benefit arising from matters outside of management’s control.
Offers of performance rights under the F22 LTIP are subject to the satisfaction of performance conditions, as outlined above,
over the performance period from 1 July 2021 to 30 June 2024. LTIP awards to KMP are at the absolute discretion of the Board.
For the F22 LTIP the following awards will apply:
• Mr Ford: opportunity of 175% of fixed remuneration at maximum, 87.5% at threshold, 0% below threshold
• Mr Young: opportunity of 150% of fixed remuneration at maximum, 75% at threshold, 0% below threshold
• Mr Boxer: opportunity of 150% of fixed remuneration at maximum, 75% at threshold, 0% below threshold
The Company will seek shareholder approval at the 2021 Annual General Meeting for the F22 LTIP offer to the CEO.
56 – TREASURY WINE ESTATES ANNUAL REPORT 2021
2. REMUNERATION STRATEGY AND FRAMEWORK
a) Remuneration strategy
TWE’s remuneration strategy sets the direction for the remuneration framework, and drives the design and application
of remuneration programs across the Company, including for executives. The strategy aims to attract, retain and reward
the best talent while building a performance oriented culture. It sets out principles and processes to ensure remuneration
practices attract and motivate the highest calibre employees to achieve TWE’s business and financial objectives.
The remuneration strategy is designed to drive strong alignment between financial results for the business, wealth
outcomes for shareholders and remuneration outcomes for employees. The Board believes that remuneration
of executives should include a fixed component and at-risk or performance-related components, including both
short-term and long-term incentives. Executive and stakeholder interests are aligned through share ownership.
The weighting of the at-risk remuneration components for each executive reflects the Board’s commitment to
performance-based reward. The diagram below illustrates the mix of remuneration components for executives, firstly
as a percentage of total remuneration (TR) at target, and then as a proportion of total maximum potential remuneration.
Section 3 of this report describes performance outcomes over the past five years, and how they have impacted
remuneration outcomes.
b) Total remuneration
Executive total remuneration comprises fixed remuneration (FR) and variable (‘at-risk’) remuneration in the form of STIP
and LTIP. The remuneration structure in F21 for current executives as at 30 June 2021 is as follows.
Total Remuneration with STIP at Target and LTIP at Threshold:
CEO
Executives
Percentage of TR
FR 41%
STIP (at target) 34%
LTIP (at threshold) 25%
Percentage of TR
FR 46%
STIP (at target) 30%
LTIP (at threshold) 24%
Total Remuneration with both STIP and LTIP at Maximum:
CEO
Executives
Percentage of TR
FR 24%
STIP (at maximum) 35%
LTIP (at maximum) 41%
Percentage of TR
FR 27%
STIP (at maximum) 32%
LTIP (at maximum) 41%
c) Fixed remuneration
For Australian-based executives, total fixed remuneration is inclusive of superannuation and other benefits. For executives
based outside Australia, references to fixed remuneration refer to base salary.
Fixed remuneration is reviewed annually and set at a market-competitive level reflective of the executive’s skills,
experience and responsibilities, and taking into account complexity of role, location and performance. The Company
looks at industry and general market peer groups, with key criteria applied such as market capitalisation and revenue.
Both Australian and global peers are considered, reflecting the complexity of roles in a global business and the
Company’s international lens on talent. Peer groups are reviewed regularly for accuracy and alignment with the
nature of the business.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 57
F21 REMUNERATION REPORT (CONTINUED)
d) Short-term incentive plan (STIP)
The STIP drives an annual at-risk component of remuneration and links business results for the fiscal year, executive
performance and reward using a balanced scorecard approach.
The STIP performance measures are consistent across the Company. They are designed to support the financial health
of the organisation and shareholder return in terms of dividends and share price – this year and over time. The metrics
are aimed at reinforcing Company culture as their achievement requires compliance with the Company’s DNA: We Bring
our Whole Self, We are Courageous and We Deliver Together. Hurdles and stretch targets are set for each metric and the
sustainability of growth and returns is non-negotiable.
F21 STIP Measures
Remuneration and Performance Link
Global EBITS
(30%-50%)
Growth in sales
volumes
(10%-15%)
Brand contribution
margin
(10%-20%)
Cash conversion
(10%-15%)
Commercial
investment
(0%-20%)
Transformation
programs
(0%-20%)
The EBITS metric focuses and rewards executives for the overall health and profit-producing ability
of the Company. It is designed to ensure TWE products are available in the right quantities and retail
locations and to reward executives for levels of earnings that will benefit shareholders and provide
capital that can be further invested by the Company for future growth.
This growth metric aims to reward executives for delivering sales volumes in our priority brands to drive
a steep trajectory in top line growth globally. Delivery of this metric drives executives to explore wider
opportunities for the Company to grow beyond existing products, markets, consumers and customers.
Executives delivering margin accretion are rewarded for delivering growth from quality brand
contribution through premiumisation of the Company’s portfolio, optimising investment and making
risk-managed, smart decisions.
This metric rewards executives for the delivery of quality growth and strong planning operations
as measured by improvements in the balance sheet, operating cash flow and forecast accuracy,
all critical to delivering ROCE metric and financial returns for investors.
This metric aims to reward executives for commercial optimisation strategies, ensuring sales volumes
are obtained in a sustainable way.
This measure focuses executives on the delivery of key transformational programs.
58 – TREASURY WINE ESTATES ANNUAL REPORT 2021
The table below provides further detail including the weighting of metrics and size of opportunity.
F21 STIP Performance Measures
STIP Opportunity
STIP Detail
The annual STIP opportunity is at the
absolute discretion of the Board. In F21,
the following STIP opportunities applied:
An annual award of cash and/or equity
may be received based on:
• Group, team and individual financial,
Target:
Executives 66.5% of FR
CEO 83.3% of FR
Maximum:
Executives 120% of FR
CEO 150% of FR
The Individual Performance Multiplier
is derived from the level of each
Executive’s achievement of individual
Key Performance Objectives (KPOs) and
demonstration of the Company’s DNA.
The Individual Performance Multiplier
can drive a result of 0 to 1.5 as per the
diagram below.
strategic and operational
performance, measured by way
of the Balanced Scorecard; and
• Agreed individual key performance
objectives (including the TWE DNA)
measured by way of the Individual
Performance Multiplier.
One-third of the STIP award for executives
is deferred into Restricted Equity in the
Company. Of this Restricted Equity,
one-half (i.e. one-sixth of the overall STIP
award) will vest after one year, and
one-half (i.e. one-sixth of the overall STIP
award) will vest after two years.
The remaining two-thirds of the STIP
award is delivered in cash at the end
of F21.
The STIP Balanced Scorecard
is weighted by role.
CEO:
50% global EBITS
15% quality growth in sales volume
20% brand contribution margin
15% cash conversion
CFO:
30% global EBITS
10% quality growth in sales volume
10% brand contribution margin
10% cash conversion
20% commercial investment
20% transformation programs
CSCDO:
30% global EBITS
10% quality growth in sales volume
10% brand contribution margin
10% cash conversion
20% commercial investment
20% transformation programs
Each measure is assessed after
the financial year-end against the
full-year audited financial report
on a constant currency basis to
determine the overall level of
performance achieved.
The Balanced Scorecard can drive a
multiplier outcome between 0 and 1.2
as per the diagram overleaf.
The overall structure of the F21 STIP is provided below.
STIP Award $
Fixed
remuneration $
STIP
opportunity %
Balanced
Scorecard
multiplier
(0 to 1.2)
Individual
multiplier
(0 to 1.5)
Fixed – based on
level of skill and
responsibility.
Fixed – based on
role and level of role
within the Company.
Variable – based on
Balanced Scorecard
performance.
Variable – based
on individual
performance.
Restricted Equity
Cash
1/3
2/3
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 59
F21 REMUNERATION REPORT (CONTINUED)
e) Long-term incentive plan (LTIP)
The LTIP is designed to reward executives for long-term performance and value creation for shareholders. Offers are
approved by the Board and made to select executives and senior leaders as nominated by the CEO. For F21, the Board
awarded the CEO an LTIP opportunity of 175% of fixed remuneration.
The performance period for the F21 LTIP is 1 July 2020 to 30 June 2023 and the plan has the following features.
LTIP Performance Measures
LTIP Opportunity
LTIP Detail
Relative Total Shareholder Return (TSR)
(25% weighting)
Relative to S&P/ASX 200 Index, excluding companies
from the energy, metal and mining, real estate and
finance sectors.
Return on Capital Employed (ROCE) Growth
(75% weighting)
Calculated as EBITS divided by average capital
employed (at constant currency). Capital employed
is the sum of average net assets (excluding SGARA)
and average net debt.
LTIP awards are at the absolute
discretion of the Board. In F21,
the following awards applied:
• CEO 175% of FR.
• Other executives 150% of FR.
• In F21, Mr Young received
an additional one-off LTIP
grant of 50% of fixed
remuneration. This one-off
grant is subject to the same
performance conditions as
the F21 LTIP.
LTIP awards are delivered in the
form of performance rights. The
number of rights allocated is based
on face value using the 90-day
Volume Weighted Average Price
(VWAP) preceding 1 July at the start
of the performance period. If the
performance conditions are met
at the end of the three-year
performance period, rights vest
and executives receive a share for
each vested performance right.
No amount is payable on the
vesting of the performance rights
or on their conversion into shares.
Any rights that do not vest, lapse.
F21 LTIP Vesting schedules
Relative TSR
Vesting Schedule
Relative TSR Ranking
% of Performance Rights subject
to relative TSR measure which vest
Below 50th percentile
0%
50th to 60th percentile
60th to 75th percentile
35%-70%
70%-100%
At or above 75th percentile
100%
ROCE baseline
10.6% (F20)
ROCE percentage
points growth
Less than 3.0
3.0 to 3.6
3.6 to 5.1
ROCE result
Less than 13.6%
13.6% to 14.2%
14.2% to 15.7%
At or above 5.1
At or above 15.7%
% of Performance Rights subject
to ROCE measure which vest
0%
35%-75%
75%-100%
100%
f) General employee share plan (Share Cellar)
The Company has a broad-based employee share plan, Share Cellar, which operates by way of after-tax employee
payroll contributions (minimum $500 to maximum $5,000) to acquire shares in the Company. The Company delivers one
matched share for every purchased share held at the plan vesting date (approximately two years), subject to continued
employment. An equivalent cash plan operates in countries where, due to local laws, it is not practicable to offer shares
to employees.
Shares were acquired in F21 under the 2020 Share Cellar offer, and a subsequent offer to participate in the 2021 Share
Cellar Plan was made during the year. The first share purchases in the 2021 Share Cellar Plan will occur in August 2021 (F22).
g) Mid-term incentive plan (MTIP) and restricted equity plan (REP)
In addition to the LTIP, the Company operates the MTIP and REP which allows the Board to make offers of Deferred Share
Rights or Restricted Shares for the purpose of attracting, retaining and motivating key employees within the Company.
Participation in the MTIP is open to senior managers (excluding executives eligible for LTIP) and is subject to performance
conditions. There were no awards granted to, or vested for, executives under the MTIP or REP in F21.
60 – TREASURY WINE ESTATES ANNUAL REPORT 2021
h) Other key information
Board discretion and clawback
The Board will exercise discretion to ensure any cash or equity outcomes are appropriately aligned to the Company’s
underlying performance and the interests of shareholders. The Board maintains the discretion to clawback any vested
or unvested equity should a clawback event arise, which was not apparent at the time the equity was awarded. This
may include (but not limited to) material misstatement of financial results, material reputational damage to the
Company, or where there was serious misconduct by a participant. This includes discretion to reduce, forfeit or reinstate
awards, require payback of proceeds from the sale of vested awards and/or reset or alter the performance conditions
applying to any award.
Leavers
The Board has absolute discretion as to whether participants retain their unvested equity upon ceasing employment,
taking into account the circumstances of their departure. In general if an executive ceases employment with the
Company they forfeit their entitlement to cash or equity under the Company’s incentive plans.
In exceptional circumstances (such as redundancy, death or disability), the Board, in its discretion, may determine
that a portion of the award is retained having regard to performance and time lapsed to date of cessation (or that
an equivalent cash payment be made). Retained awards will generally be subject to post-employment vesting, where
the participant must continue to hold the relevant Performance Rights until the end of the performance period, and
be subject to the performance conditions under the plan.
Dividends and voting rights
Plan participants granted restricted shares are entitled to dividends and voting rights. Participants holding time-restricted
rights or performance rights are entitled to neither dividends nor voting rights.
Change of control
In the event of a change of control, unless the Board determines otherwise, the transfer restrictions imposed on the shares
will be lifted, but only in so far as to permit the executive to participate in the change of control event. Any shares that do
not participate in the change of control event will continue to be subject to restrictions until the end of the applicable
restriction period.
Hedging
To ensure the variable components of the Company’s remuneration structure remain ‘at-risk’, employees may not hedge
against the risk inherent in arrangements such as the LTIP or any other equity-based incentive plans. Awards will be
forfeited if the policy is breached.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 61
F21 REMUNERATION REPORT (CONTINUED)
3. PERFORMANCE AND REMUNERATION OUTCOMES
a) Overview of Company performance
Company performance during F21 was once-again impacted by the COVID-19 pandemic, but more significantly, the
introduction of tariffs for imports into China by MOFCOM. EBITS margin accretion increased and the Company delivered
EBITS of $510.3 million which is in line with prior year and a 3.5% increase on an organic basis. ROCE improved from F20
at 10.8% and TWE continues to take a disciplined approach to capital allocation. Our global response plan to mitigate
impacts from the measures implemented by MOFCOM is progressing well. Key highlights since the tariffs announcement
include the delivery of incremental growth for Penfolds Bin & Icon in key Asian markets outside of China, accelerated
investment in sales and marketing capability in priority growth markets and the establishment of new multi country
of origin propositions including Penfolds California Collection.
The table below summarises the Company’s financial performance over the last five financial years.
Table 3.1: Overview of Company performance (reported)
Financial year ended 30 June 2021
EBITS performance (A$ million)
Earnings per share (cents)2
Dividends paid per share (cents)
Franked (%)
Closing share price ($ at 30 June)
Return on capital employed (%)
2017
463.6
38.0
25
0
13.16
10.4
20181
543.8
49.1
28
63
17.39
11.7
20191
664.7
57.2
35
100
14.92
13.6
20201
512.6
41.7
40
100
10.48
10.2
2021
510.3
42.9
233
100
11.68
10.8
1. Prior year results for EBITS, Earnings per share and Return on capital employed have been restated for changes in accounting policies.
Refer to Note 32 of the Financial Statements for further information.
2. Before material items and SGARA.
3. The 2021 dividend of 23 cents is comprised of the final dividend in F20 of 8 cents (100% franked) paid on 2 October 2020 and the interim F21
dividend of 15 cents (100% franked) paid on 1 April 2021. For the final F21 dividend see Note 6 of the Financial Statements.
The following graph shows movement in the Company share price against movement in the ASX200 over the last five years.
250%
200%
150%
100%
50%
Jul– 2 016
TWE
ASX200
J a n – 2 017
Jul– 2 017
J a n – 2 018
Jul– 2 018
J a n – 2 019
Jul– 2 019
J a n – 2 02 0
Jul– 2 02 0
J a n – 2 021
Jul– 2 021
b) Fixed remuneration outcomes
Market benchmarking and salary reviews are conducted annually with any changes effective from 1 September. When
comparing executives’ remuneration to the market, the ASX 21-75 peer group was used. No adjustments were made
to fixed remuneration of executives in F21.
c) Short-term incentive outcomes
Short-term incentives are assessed by achievement against each executive’s Balanced Scorecard and specific
personal objectives.
The F21 STIP scorecard is heavily weighted to financial metrics with the primary driver EBITS. Our F21 EBITS results reflect
the impact of the COVID-19 pandemic and MOFCOM tariffs, which had a significant impact on TWE’s trading performance
across all geographies, in particular, China. As outlined previously, the Board adjusted STIP targets after the first half of F21.
After removing the impact caused by the loss of shipments to China, the revised targets included stretch goals for
executives to achieve. The Company has delivered outstanding performance against these, partially offsetting some
of the MOFCOM impacts as well as ongoing adverse COVID-19 impacts. This was imperative to ensuring we appropriately
motivate and reward our executives for results delivered in extenuating circumstances, but also to set up TWE for long
term growth and returns for our shareholders.
62 – TREASURY WINE ESTATES ANNUAL REPORT 2021
F21 STIP
Scorecard
Financial goals
Global EBITS
Quality growth in
sales volume
Brand Contribution
margin
Cash Conversion
Strategic goals
Commercial
Investment
Transformation
Program Execution
Actual results for the Balanced Scorecards are provided below.
CEO
CFO
CSCDO
Weight
Achievement Payment Weight Achievement Payment Weight Achievement Payment
50%
15%
20%
15%
50%
50%
30%
30%
30%
30%
30%
30%
15%
15%
10%
10%
10%
10%
10%
10%
23%
18%
20%
15%
10%
10%
12%
12%
10%
10%
10%
10%
12%
12%
10%
10%
20%
20%
20%
20%
20%
20%
20%
20%
104%1
20%
20%
100%
100%
20%
104%1
20%
100%
Total
100%
106%1
100%
100%
1. Whilst the company achieved above target performance against the revised STIP targets, the Board has determined that the F21 STIP Balanced
Scorecard multiplier for executives will be paid at 1.0x (on target).
The table below sets out short-term incentive outcomes for each executive inclusive of the impact of individual
performance multiplier outcomes.
Table 3.2: F21 STIP outcomes
FR2 for STIP
Opportunity
($)
1,500,000
714,000
675,000
STIP
Opportunity
at Target
(% of FR)
(%)
83.3%
66.5%
66.5%
Executive1
TM Ford
MJ Young
SR Boxer
STIP
Opportunity
at Target
($)
STIP
awarded3
($)
Total STIP
Awarded
(% of FR)3
(%)
Cash
($)
Restricted
Equity
($)
Total STIP
Opportunity
Forfeited
( % of FR)3
(%)
1,250,000
1,625,000
108.3%
1,083,333
541,667
474,810
617,253
448,875
493,763
86.5%
73.2%
411,502
205,751
329,175
164,588
0%
0%
0%
1. Reports only executives who were KMP at 30 June 2021.
2. FR is salary as of 1 September 2020.
3. Inclusive of balanced scorecard and individual performance multiplier outcomes.
d) Long-term incentive awards and outcomes
LTIP awarded during the year
Performance rights were allocated to executives under the F21 LTIP after the 2020 Annual General Meeting and are subject
to a three-year performance period. Any vesting is subject to two hurdles (detailed on page 60). The performance rights
have no exercise price and the minimum total value of the grant is zero. The maximum value is the number of awards
granted multiplied by the share price at vesting.
Table 3.3: F21 LTIP performance rights
Executive
Grant date
Vesting date
Number of
awards granted
Face Value at
grantdate ($)1
Fair Value at
grant date ($)2
Current
(as at 30 June 2021)
TM Ford
MJ Young
SR Boxer
23 November 2020
30 June 2023
23 November 2020
30 June 2023
23 November 2020
30 June 2023
255,940
139,231
98,719
2,624,997
1,427,995
1,012,492
2,125,582
1,156,313
819,861
1. The value of LTIP awards granted to executives was the face value of the volume weighted average price (VWAP) of Company shares sold on the
Australian Securities Exchange over the 90-day period up to and including 30 June 2020 ($10.2563 per share).
2. The fair value ($) in the table above is calculated using the valuation method detailed in note 22 of the Financial Statements.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 63
F21 REMUNERATION REPORT (CONTINUED)
LTIP Vesting
The F19 LTIP was due to vest at the end of F21. The vesting schedule for the F19 LTIP is provided below.
Relative TSR Vesting
Schedule
Relative TSR Ranking
% of Performance Rights subject
to relative TSR measure which vest
Below 50th percentile
0%
50th to 75th percentile
60th to 75th percentile
35%-70%
70%-100%
At or above 75th percentile
100%
ROCE baseline
12.6% (F18)
ROCE percentage
points growth
Less than 1.9
1.9 to 2.6
ROCE result
Less than 14.5%
14.5% to 15.2%
At or above 2.6
At or above 15.2%
% of Performance Rights subject
to ROCE measure which vest
0%
35-100%
100%
Performance is measured over the three-year period ended 30 June 2021. The Group’s relative TSR performance was at
the 15.8th percentile relative to its peer group while ROCE results, impacted significantly by the COVID-19 pandemic and
MOFCOM tariffs, were also below threshold. The Board elected not to apply discretion to the F19 LTIP, which resulted in nil
vesting for eligible executives.
The F19 LTIP vesting outcome by executive is provided below.
Table 3.4: Vesting/lapsing of F19 LTIP
Executive
Current
(as at 30 June 2021)
TM Ford
MJ Young
Former
MA Clarke4
Number of
Performance
Rights
granted
Value at
grant1
($)
Number
of Rights
vested
Value
vested2
($)
Number
of rights
which
lapsed3
Value
lapsed2
($)
61,669
60,468
1,078,270
1,057,271
285,963
5,000,006
0
0
0
0
0
0
61,669
60,468
720,294
706,266
285,963
3,340,048
1.
‘Value at grant’ is calculated based on $17.4848 which was the volume weighted average price of Company shares sold on the ASX over the
90 day period up to and including 30 June 2018. This was the price used to calculate the number of performance rights granted under the F19 LTIP
as previously disclosed by the Company.
2. The value ‘lapsed’ or ‘vested’ is calculated based on the closing share price on the performance period end date of 30 June 2021, being $11.68.
3. The number of rights which lapsed as they did not vest.
4. As disclosed in TWE’s Remuneration Report for the year ended 30 June 2020; 94,973 Performance Rights held by Mr Clarke on 30 June 2020 under
the F19 LTIP were forfeited pursuant to the good leaver provisions of the LTIP Plan Rules on his retirement on 1 July 2020. The remaining 190,990
Performance Rights lapsed on 30 June 2021 as they did not vest.
e) General employee share plan (Share Cellar)
During F21, the 2021 Share Cellar Plan was launched. No executives participated in this or the 2020 plan. The Company has
approximately one quarter of all eligible employees participating in the Share Cellar Plan and investing their post-tax pay
to become shareholders.
f) Summary of awards held by executives
The table on the following page sets out the number and movement of awards held by executives. Restricted Shares
are generally issued under STIP Deferral (Restricted Equity). Performance Rights are issued under the LTIP. Deferred Share
Rights are issued under the REP or represent the right to matching shares under the 2018 and 2019 Share Cellar Plans.
64 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Table 3.5: Summary of awards held by executives
Name
Current
(as at 30 June 2021)
Held at the
start of the
Reporting
Period
Granted/
acquired
during
Reporting
Period
Received
upon
vesting/
exercising
Lapsed or
forfeited1
Other
change2
Held at the
end of the
Reporting
Period
TM Ford
Restricted Shares
20,875
–
(13,411)
–
Performance Rights
139,105
255,940
–
(61,669)
MJ Young
Restricted Shares
Deferred Share Rights
489
11,963
–
–
(145)
(6,468)
Performance Rights
128,224
139,231
Deferred Share Rights
224
SR Boxer3
Restricted Shares
Performance Rights
Deferred Share Rights
–
–
–
–
–
98,719
–
–
–
–
–
–
–
–
(60,468)
–
–
–
–
Total (Current KMP)
300,880
493,890
(20,024)
(122,137)
–
–
–
–
–
–
–
–
–
–
7,464
333,376
344
5,495
206,987
224
–
98,719
–
652,609
Former
MA Clarke4
Restricted Shares
Performance Rights
Deferred Share Rights
105,085
621,520
489
–
–
–
(69,666)
–
(35,419)
–
(509,157)
(112,363)
(489)
–
–
–
–
–
Grand Total
1,027,974
493,890
(90,179)
(631,294)
(147,782)
652,609
1. Represents F19 LTIP performance rights which lapsed on 30 June 2021. In the case of Mr Clarke, it also represents 318,167 Performance Rights forfeited
on retirement on 1 July 2020 pursuant to the good leaver provisions of the LTIP Plan Rules (94,973 from the F19 LTIP and 223,194 from the F20 LTIP).
2. Represents balance adjustment for executives ceasing to be a member of KMP.
3. Mr Boxer’s holding at the start of the period reflects his holding on 1 July 2020 when he became KMP.
4. Ceased as KMP on 1 July 2020.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 65
F21 REMUNERATION REPORT (CONTINUED)
g) Remuneration of executives
The table below (Table 3.6) provides details of remuneration for the CEO and executives for F21, calculated in accordance
with statutory accounting requirements. All amounts are in Australian dollars and relate only to the portion of the year
in which the person occupied the KMP role.
Table 3.6: Remuneration of executives
Executive
Year
Salary/
Fees1
Leave
Accrual2
Non-Monetary
Benefits3
Total Cash
Incentive4
Other
Payments5
Superannuation/
Pension
Total Amortisation
Value of LTIP6
Other Equity7
Total
Performance
related %8
Termination
Benefits
Short-Term Benefits
Share-Based Payments
Current
(as at 30 June 2021)
TM Ford
MJ Young
SR Boxer
Former
MA Clarke
TOTAL
F21
F20
F21
F20
F21
F20
F21
F20
F21
F20
1,478,306
268,498
778,997
692,306
690,664
653,306
–
27,147
34,610
12,776
32,865
–
8,776
(304,837)
2,622,331
(356,646)
2,832,694
31,136
4,091,992
(316,723)
26,847
25,265
10,031
10,665
10,031
–
25,378
(14,294)
72,288
21,636
1,083,333
808
–
411,502
–
329,175
–
–
–
–
–
–
–
–
–
–
1,824,010
–
808
–
1. Represents cash salary including any salary sacrificed items such as superannuation and novated motor vehicles.
2. Includes any net changes in the balance of annual leave and long service leave (i.e. leave entitlements that accrued during the year but were
not used).
3. Includes the provision of car parking, product allocations, executive medical checks, taxation expenses and Fringe Benefits Tax on all benefits,
where applicable.
4. Represents cash payments made under the F21 STIP, excluding the Restricted Equity portion which will be allocated in September 2021. No
payment was made to any KMP in relation to F20 STIP.
5. Represents a refund of withholding taxes on Mr Ford’s prior year California State Tax return. This has been treated as a taxable benefit and has
been subject to appropriate FBT.
21,694
21,003
21,694
21,003
21,694
834
21,003
65,916
63,008
196,394
452,436
(27,630)
472,709
113,519
–
–
104,718
3,180,599
263,553
1,568,401
70,185
1,212,699
142,605
1,350,422
–
–
–
1,160,591
–
(269,849)
3,696,467
1,869,840
7,838,701
282,283
4,621,613
174,904
5,284,039
2,275,998
10,757,524
44%
46%
37%
46%
38%
0%
71%
–
–
–
–
–
–
–
–
–
–
66 – TREASURY WINE ESTATES ANNUAL REPORT 2021
The table below (Table 3.6) provides details of remuneration for the CEO and executives for F21, calculated in accordance
with statutory accounting requirements. All amounts are in Australian dollars and relate only to the portion of the year
g) Remuneration of executives
in which the person occupied the KMP role.
Table 3.6: Remuneration of executives
(as at 30 June 2021)
Executive
Current
TM Ford
MJ Young
SR Boxer
Former
MA Clarke
TOTAL
1,478,306
268,498
1,083,333
808
F21
F20
F21
F20
F21
F20
F21
F20
F21
F20
778,997
692,306
690,664
653,306
–
27,147
34,610
12,776
32,865
–
8,776
(304,837)
2,622,331
(356,646)
2,832,694
31,136
4,091,992
(316,723)
26,847
25,265
10,031
10,665
10,031
–
25,378
(14,294)
72,288
21,636
–
411,502
329,175
–
–
–
–
–
1,824,010
808
–
–
–
–
–
–
–
–
Year
Salary/
Fees1
Leave
Accrual2
Non-Monetary
Benefits3
Total Cash
Incentive4
Other
Payments5
Superannuation/
Pension
Total Amortisation
Value of LTIP6
Other Equity7
Total
Performance
related %8
Termination
Benefits
Short-Term Benefits
Share-Based Payments
21,694
21,003
21,694
21,003
21,694
834
21,003
65,916
63,008
196,394
452,436
(27,630)
472,709
113,519
–
–
104,718
3,180,599
263,553
1,568,401
70,185
1,212,699
142,605
1,350,422
–
–
–
1,160,591
–
(269,849)
3,696,467
1,869,840
7,838,701
282,283
4,621,613
174,904
5,284,039
2,275,998
10,757,524
44%
46%
37%
46%
38%
0%
71%
–
–
–
–
–
–
–
–
–
–
1. Represents cash salary including any salary sacrificed items such as superannuation and novated motor vehicles.
2. Includes any net changes in the balance of annual leave and long service leave (i.e. leave entitlements that accrued during the year but were
6. Includes a proportion of the fair value of all outstanding LTIP offers at the start of the year, or which were offered during the year. Under Australian
Accounting Standards, the fair value is determined as at the offer date and is apportioned on a straight-line basis across the expected vesting
period after adjusting at each reporting date for an estimation of the number of shares that will ultimately vest.
3. Includes the provision of car parking, product allocations, executive medical checks, taxation expenses and Fringe Benefits Tax on all benefits,
7. Includes a proportion of the fair value of all Restricted Shares and Deferred Share Rights held under outstanding Restricted Equity Plans at the
4. Represents cash payments made under the F21 STIP, excluding the Restricted Equity portion which will be allocated in September 2021. No
start of the year. F19 STIP Restricted Equity was outstanding at the end of F21. Under Australian Accounting Standards, the fair value is determined
as at the offer date and is apportioned on a straight-line basis across the expected vesting period after adjusting at each reporting date for
an estimation of the number of shares that will ultimately vest.
5. Represents a refund of withholding taxes on Mr Ford’s prior year California State Tax return. This has been treated as a taxable benefit and has
8. Represents the sum of incentive and Performance Rights/Restricted Equity as a percentage of total remuneration, excluding termination
payments. No termination payments were made to Executives during F21.
not used).
where applicable.
payment was made to any KMP in relation to F20 STIP.
been subject to appropriate FBT.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 67
F21 REMUNERATION REPORT (CONTINUED)
NON-EXECUTIVE DIRECTOR REMUNERATION
4. FRAMEWORK AND OUTCOMES
This section of the report refers to the following non-executive directors.
Name
Position
Dates
Non-executive directors
Current
PA Rayner
EYC Chan
LW Cheang
WL Every-Burns
GA Hounsell
CE Jay
A Korsanos
LM Shanahan
Chairman
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
a) Fee pool
The current maximum aggregate fee pool of $2,500,000 per annum (inclusive of superannuation) was approved by
shareholders at the 2016 Annual General Meeting.
b) Non-executive director fees
The level of non-executive directors’ fees takes into account the risks and responsibilities of the role, the global reach
and complexity of the business, director skills and experience, and market benchmark data (provided by independent
external consultants).
There were no increases to Chairman or non-executive director fees during F21.
Table 4.1: F21 Non-executive director fees
Board/Committee
Board base fee
Audit and Risk Committee
Human Resources Committee
Nominations Committee
Chairman fee ($)
Member fee ($)
530,000
45,000
41,200
10,0001
193,000
22,000
20,600
5,000
The above fees were effective from 1 April 2019 are inclusive of superannuation.
1. The Chairman of the Board, Mr Rayner, is also the Chairman of the Nominations Committee. He does not receive any additional fees for this role.
In addition to the above fees, non-executive directors receive a wine allowance. In order to maintain independence,
non-executive directors do not participate in the Company’s incentive plans and they do not receive retirement benefits
other than the superannuation contributions disclosed in this report.
68 – TREASURY WINE ESTATES ANNUAL REPORT 2021
c) Non-executive director outcomes
Details of non-executive director remuneration for F21 and F20 are provided below.
Table 4.2: F21 Non-executive director remuneration
Non-executive director
PA Rayner
EYC Chan
L Cheang
WL Every-Burns
GA Hounsell
CE Jay
LM Shanahan
A Korsanos2
TOTAL
Year
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
Fees
$
524,576
508,997
215,000
211,865
193,000
190,907
218,447
218,447
221,918
237,447
213,600
214,650
213,600
213,600
196,347
49,087
1,996,488
1,845,000
Non-monetary
benefits1
$
Superannuation
$
15,617
16,088
4,000
4,000
4,000
4,000
6,660
6,660
6,660
6,660
4,000
4,000
4,000
4,000
6,660
1,000
51,597
46,409
5,424
21,003
–
3,135
–
2,093
20,753
20,753
21,082
21,003
–
–
–
–
18,653
4,663
65,912
72,650
Total
$
545,617
546,088
219,000
219,000
197,000
197,000
245,860
245,860
249,660
265,110
217,600
218,650
217,600
217,600
221,660
54,750
2,113,997
1,964,059
Includes product allocations, entertainment and Fringe Benefits Tax, where applicable. The amounts for Mr Rayner includes car parking.
1.
2. Ms Korsanos commenced as a Non-executive director from 1 April 2020.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 69
F21 REMUNERATION REPORT (CONTINUED)
OTHER REMUNERATION INFORMATION
5. GOVERNANCE
a) Role of the Human Resources Committee (HRC)
The HRC provides assistance to the Board in relation to such matters as monitoring remuneration principles and
frameworks, providing advice on remuneration matters, making remuneration recommendations for executives,
approving incentive plans, and reviewing and governing remuneration policies. In addition to its remuneration
responsibilities and together with the Board, the HRC’s duties include overseeing talent management, diversity
and leadership development.
The Committee ensures that the Company’s policies and frameworks aid the achievement of the Company’s strategic
objectives, provide appropriate governance, are aligned with market practice, and fulfil the Board’s responsibility to
shareholders. During the year the Audit & Risk Committee Chair attended all Human Resources Committee meetings as a
Committee member. Also, the Human Resources Committee Chair typically attends the Audit & Risk Committee meetings,
providing a link between both Committees to assist with oversight of non-financial risk.
As outlined in Section 4 of the Corporate Governance Statement disclosed on the Company’s website wwwtweglobal.com,
the Company has procedures in place for the reporting of any matter that may give rise to a conflict between the
interests of a director and those of the Company. In addition, the Company has adopted a general policy for employees
in relation to the disclosure and management of potential conflicts of interest (see Section 4 of the Corporate Governance
Statement on wwwtweglobal.com).
b) Engagement of remuneration advisors
In F21, the Board and HRC engaged PwC as an independent advisor to the HRC. Potential conflicts of interest are
considered by the HRC, and the Board and HRC are satisfied that the advice provided by PwC was free from undue
influence. Any advice provided by remuneration consultants is used as a guide only and is not a substitute for detailed
consideration of all relevant issues by the HRC. No remuneration recommendations, as defined by the Corporations
Act 2001 (Cth), were provided.
c) Executive and non-executive director share ownership
Executives and non-executive directors are encouraged to have control over ordinary shares in the Company, and
executives and non-executive directors are required to hold at least the equivalent of one year’s fixed remuneration
or base fees. The guidelines are expected to be met over a reasonable period of time (approximately five years).
The Company’s variable incentive programs contribute towards executives meeting this guideline. The Director Share
Acquisition Plan (DSAP) allows directors to apply after-tax fees to the acquisition of the Company’s shares on a periodic
basis at the prevailing market rate, however there was no opportunity to participate in this plan during F21 due to trading
restrictions. The table below sets out KMP shareholdings.
Table 5.1: KMP shareholdings
Current (as at 30 June 2021)
Executive
Current
(as at 30 June 2021)
TM Ford
MJ Young
SR Boxer
Former
MA Clarke3
Executive total
Balance
at start of
the year
Received
upon vesting/
exercise1
Other
changes
during
the year2
Balance
at end
of year
50,199
18,712
–
714,905
783,816
13,566
6,468
–
70,155
90,179
–
178
–
(785,060)
(784,882)
63,755
25,358
–
–
89,113
1.
Includes release of restricted shares under Tranche 1 of F19 Deferred STIP and Tranche 2 of F18 Deferred STIP, and vesting of Share Cellar
matched rights.
2. Includes the purchase/sale of ordinary shares during F21 and for Mr Young, shares received under TWE’s dividend reinvestment plan.
3. Mr Clarke’s other changes includes a balance adjustment for when he ceased to be KMP.
70 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Table 5.1: KMP shareholdings (continued)
F21
Non-executive directors
Current
(as at 30 June 2021)
PA Rayner
EYC Chan
L Cheang6
WL Every-Burns
GA Hounsell
CE Jay
LM Shanahan
T Korsanos
Non-executive director total
Grand total
Balance at start
of the year
Acquired
during the year
as part of DSAP4
Other changes
during the year
Balance at
end of year5
297,819
48,280
–
100,000
83,500
3,382
11,559
5,000
549,540
1,333,356
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,666
7,500
7,500
90,179
(773,716)
297,819
48,280
–
100,000
83,500
3,382
15,225
12,500
560,706
649,819
4. Shares acquired by Directors using post-tax fees in TWE’s Director Share Acquisition Plan (DSAP).
5. No changes in shareholdings have occurred for non-executive directors from the balance date to the date of this report.
6. Ms Cheang has been granted an exemption from TWE’s minimum shareholding requirement due to the extensive regulatory processes for
securities trading that apply in relation to her role as Vice Chairman and Chief Executive of Hang Seng Bank Limited and Group General Manager
of HSBC Holdings plc.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 71
F21 REMUNERATION REPORT (CONTINUED)
6. FURTHER INFORMATION
a) Executive contracts
There is no fixed term for executive contracts. The Company may terminate service agreements immediately for cause,
in which case the executive is not entitled to any payment other than the value of fixed remuneration and accrued
leave entitlements up to the termination date. On resignation all executives are required to give six months’ notice.
If the termination is Company initiated without cause, all executives have termination provisions of six months’ notice
by the Company plus six months’ severance pay.
b) Other transactions with KMP and their personally related entities
The Company entered into transactions which are insignificant in amount with KMP and their related parties within
normal employee, customer or supplier relationships on terms and conditions no more favourable than those available
in similar dealings which include payments of salaries and benefits and purchase of Company products.
Some directors of the Company are also directors of public companies which have transactions with the Company.
The relevant directors do not believe they have the individual capacity to control or significantly influence the financial
policies of those companies. The companies are therefore not considered to be related parties for the purpose of the
disclosure requirements of the Corporations Act 2001 (Cth).
c) Prior years’ equity arrangements
This section summarises all outstanding equity arrangements for executives, as reported in previous Remuneration Reports.
The below equity plans have no exercise price and the minimum total value of the grant is zero. The maximum value
is the number of awards granted multiplied by the share price at vesting.
Table 6.1: Prior years’ restricted equity1
Executive
Plan
Instrument
Type
Allocation Date
Number
Face Value
at Allocation
Date2, 3, 4
($)
Fair Value at
Allocation
Date5
($)
Vesting Date
TM Ford
F19 STIP
(tranche 2)
Restricted
Shares
13 September 2019
7,464
136,975
136,975
25 August 2021
2019 Share
Cellar
Matched
Rights
2019 Share
Cellar
Matched
Rights
2019 Share
Cellar
Matched
Rights
F20 LTIP
Performance
Rights
3 September 2019
30 October 2019
20 April 2020
120
52
172
2,264
2,264
25 August 2021
903
1,825
903
25 August 2021
1,825
25 August 2021
11 November 2019
77,436
1,199,995
1,216,907
30 June 2022
MJ Young
F19 STIP
(tranche 2)
Restricted
Shares
13 September 2019
5,495
100,841
100,841
25 August 2021
2019 Share
Cellar
Matched
Rights
2019 Share
Cellar
Matched
Rights
F20 LTIP
Performance
Rights
30 October 2019
20 April 2020
52
172
903
1,825
903
25 August 2021
1,825
25 August 2021
11 November 2019
67,756
1,049,988
1,064,786
30 June 2022
1. Reports only executives who were KMP at 30 June 2021. As Mr Boxer did not commence until 1 June 2020, he has no prior years restricted equity
on foot as at 30 June 2021.
2. The value of STIP Deferral at allocation date is calculated based on the five-day VWAP up to and including the allocation date. The F19 STIP
allocation price was $18.3514.
3. The value of F20 LTIP awards at allocation date is calculated based on the ninety-day VWAP up to and including 30 June 2019 ($15.4966 per share).
The vesting schedule is provided in Table 6.2.
4. The value of matched rights is calculated based on the purchase price of the 2019 Share Cellar shares at each purchase date.
5. This LTIP value is calculated using the valuation method detailed in Note 21 of the Financial Statements. All other plans are based on face value.
72 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Table 6.2: F20 LTIP vesting schedules
Relative TSR Vesting
Schedule
Relative TSR Ranking
% of Performance Rights subject
to relative TSR measure which vest
Below 50th percentile
0%
50th to 60th percentile
60th to 75th percentile
35%-70%
70%-100%
At or above 75th percentile
100%
ROCE baseline
13.8% (F19)
ROCE percentage
points growth
Less than 1.0
1.0 to 1.9
At or above 1.9
d) Definitions
Term
Definition
ROCE result
Less than 14.8%
14.8% to 15.7%
At or above 15.7%
% of Performance Rights subject
to ROCE measure which vest
0%
35%-100%
100%
Constant currency
An exchange rate that eliminates the effects of exchange rate fluctuations year-on-year.
Earnings per Share (EPS)
NPAT excluding SGARA and material items, divided by the weighted average number of shares.
Adjusted EPS is used to calculate performance outcomes, meaning that the Board retains the
discretion to adjust EPS to ensure that participants are not penalised or provided with a windfall
gain arising from matters outside of management’s control.
EBITS
Earnings before interest, tax, SGARA and material items.
Key management
personnel (KMP)
Phantom Shares
Those persons having authority and responsibility for planning, directing and controlling the major
activities of the Company and the Group, directly or indirectly, including any director (whether
executive or otherwise), as listed in the introduction to the Remuneration Report.
Units which provide the participant with a right to receive a cash payment at the vesting date,
whereby the payment is tied to the market value of an equivalent number of TWE shares.
Relative Total
Shareholder Return (TSR)
Restricted Equity
The amount of the payout will increase as the share price rises, and decrease if the share price falls,
but without the participant actually receiving any TWE shares.
The return on investment of a company relative to a peer group of companies.
Rights or shares granted by TWE that vest upon the satisfaction of certain conditions, such as
continued employment for a period of time or the achievement of particular performance
milestones. The plan participant cannot deal in the equity until it vests and the restriction is lifted.
Return on Capital
Employed (ROCE)
EBITS divided by Capital Employed (at constant currency). Capital Employed is the sum of average
net assets (adjusted for SGARA impact) and average net debt.
SGARA
Self-generating and regenerating assets.
SGARA represents the difference between the fair value of harvest (as determined under AASB 141
Agriculture) and the cost of harvest. The fair value gain or loss is excluded from Management EBITS so
that earnings can be assessed based on the cost of harvest, rather than their fair value. This
approach results in a better reflection of the true nature of TWE’s consumer branded and FMCG
business and improved comparability with domestic and global peers.
Total Shareholder
Return (TSR)
Total return on investment of a security, taking into account both capital appreciation and distributed
income that was reinvested.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 73
Consolidated statement of profit or loss and other
comprehensive income
For the year ended 30 June 2021
Revenue
Cost of sales
Gross profit
Selling expenses
Marketing expenses
Administration expenses
Other income/(expenses)
Profit before tax and finance costs
Finance income
Finance costs
Net finance costs
Profit before tax
Income tax expense
Net profit
Net profit attributable to non-controlling interests
Net profit attributable to members of Treasury Wine Estates Limited
Other comprehensive income/(loss)
Items that may subsequently be reclassified to profit or loss
Cash flow hedges
Tax on cash flow hedges
Exchange gain/(loss) on translation of foreign operations
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year attributable
to members of Treasury Wine Estates Limited
Non-controlling interests
Total comprehensive income for the year
Earnings per share for profit attributable to the
ordinary equity holders of the Company
Basic
Diluted
Note
3
2021
$m
2,683.9
(1,659.2)
1,024.7
Restated1
2020
$m
2,678.2
(1,588.9)
1,089.3
23
(246.6)
(131.5)
(159.8)
(55.6)
431.2
33.4
(106.9)
(73.5)
357.7
(107.7)
250.0
–
250.0
10.9
(2.7)
(109.0)
(100.8)
149.2
–
149.2
(312.7)
(125.5)
(166.8)
(49.7)
434.6
54.1
(140.0)
(85.9)
348.7
(103.3)
245.4
–
245.4
(15.5)
3.9
14.5
2.9
248.3
–
248.3
Cents
per share
Cents
per share
7
7
34.7
34.6
34.1
34.0
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
1.
Reported results restated for changes to accounting policies. Refer to note 32.
74 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Consolidated statement of financial position
As at 30 June 2021
Current assets
Cash and cash equivalents
Receivables
Inventories
Assets held for sale
Other current assets
Total current assets
Non-current assets
Inventories
Property, plant and equipment
Right-of-use assets
Agricultural assets
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Borrowings
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total parent entity interest
Non-controlling interests
Total equity
Note
9
9
9
14
9
10
11
12
13
23
9
16
18
18
23
19
21
2021
$m
448.1
621.3
839.7
140.2
8.0
Restated1
2020
$m
449.1
553.5
1,017.4
74.3
6.0
2,057.3
2,100.3
1,056.8
1,322.5
448.4
33.8
1,155.5
183.7
26.2
4,226.9
6,284.2
703.6
21.1
100.0
53.1
0.7
878.5
1,474.7
309.6
30.2
1,814.5
2,693.0
3,591.2
1,059.2
1,397.4
517.0
34.1
1,294.1
193.8
48.8
4,544.4
6,644.7
682.1
22.9
53.9
223.3
0.8
983.0
1,702.3
334.3
29.0
2,065.6
3,048.6
3,596.1
3,280.7
3,269.8
(88.0)
394.4
3,587.1
4.1
12.0
310.2
3,592.0
4.1
3,591.2
3,596.1
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
1.
Reported results restated for changes to accounting policies. Refer to note 32.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 75
Consolidated statement of changes in equity
For the year ended 30 June 2021
Contributed
equity
$m
Retained
earnings
$m
Foreign
currency
translation
reserve
$m
Other
reserves
$m
Non-
controlling
interests
$m
Total
$m
Total
equity
$m
Balance at 30 June 20191
3,243.8
352.6
72.1
(43.0)
3,625.5
4.1
3,629.6
Profit for the year
Total other comprehensive
income/(loss)
Total comprehensive income
for the year/(loss)
Transactions with owners
in their capacity as owners
directly in equity
Share based payment expense
Vested deferred shares
and share rights
Dividends to owners
of the Company
Balance at 30 June 20201
Profit for the year
Total other comprehensive
income/(loss)
Total comprehensive income
for the year/(loss)
Transactions with owners
in their capacity as owners
directly in equity
Share based payment expense
Vested deferred shares
and share rights
Dividends to owners
of the Company
–
–
–
-
14.5
11.5
3,269.8
–
–
–
–
3.7
7.2
Balance at 30 June 2021
3,280.7
245.4
–
245.4
-
–
(287.8)
310.2
250.0
–
–
(165.9)
394.4
–
14.5
14.5
-
–
–
–
245.4
(11.6)
2.9
(11.6)
248.3
10.9
10.9
(30.9)
(16.4)
–
(276.3)
–
–
–
-
–
–
245.4
2.9
248.3
10.9
(16.4)
(276.3)
86.6
(74.6)
3,592.0
4.1
3,596.1
–
–
(109.0)
–
8.2
250.0
(100.8)
250.0
(109.0)
8.2
149.2
–
–
–
–
–
–
250.0
(100.8)
149.2
5.0
(0.5)
(158.7)
–
–
–
5.0
5.0
(4.2)
(0.5)
–
(158.7)
(22.4)
(65.6)
3,587.1
4.1
3,591.2
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
1.
Reported results restated for changes to accounting policies. Refer to note 32.
76 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Consolidated statement of cash flows
For the year ended 30 June 2021
2021
$m
inflows/
(outflows)
Note
Restated1
2020
$m
inflows/
(outflows)
Cash flows from operating activities
Receipts from customers
Payments to suppliers, governments and employees
Borrowing costs paid
Income taxes paid
Interest paid (net)
Net cash flows from operating activities
8
Cash flows from investing activities
Payments for property, plant, and equipment
Payments for intangible assets
Payments for subsidiaries, net of cash acquired
Proceeds from sale of property, plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Dividend payments
Proceeds from borrowings
Repayment of borrowings
Purchase of shares – employee equity plans
Net cash flows used in financing activities
Total cash flows from activities
3,383.7
(2,721.3)
(6.2)
(118.4)
(66.1)
471.7
(109.9)
(11.3)
–
61.8
(59.4)
(158.7)
217.4
(463.2)
0.9
(403.6)
8.7
3,616.6
(2,997.6)
(4.0)
(168.0)
(80.1)
366.9
(136.6)
(8.0)
(22.3)
100.2
(66.7)
(276.3)
329.2
(300.4)
(4.9)
(252.4)
47.8
Cash and cash equivalents at the beginning of the year
449.1
401.8
Effects of exchange rate changes on foreign currency cash flows
and cash balances
Cash and cash equivalents at end of the year
9
(9.7)
448.1
(0.5)
449.1
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
1.
Reported results restated for changes to accounting policies. Refer to note 32.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 77
Notes to the consolidated financial statements:
About this report
For the year ended 30 June 2021
Operating assets and liabilities: provides information
regarding the physical assets and non-physical assets
used by the Group to generate revenues and profits
(including associated liabilities). This section also explains
the accounting policies applied and specific judgements
and estimates made by management in arriving at the
value of these assets and operating liabilities.
Capital structure: provides information about the capital
management practices adopted by the Group –
particularly how much capital is raised from shareholders
(equity) and how much is borrowed from financial
institutions (debt) in order to finance the activities of the
Group both now and in the future.
Taxation: sets out the Group’s tax accounting policies,
the current and deferred tax charges, a reconciliation
of profit or loss before tax to the tax charge or credit
and the movements in deferred tax assets and liabilities.
Risk: discusses the Group’s exposure to various financial
risks, explains how these affect the financial position
of the Group and what is done to manage these risks.
Group composition: explains aspects of the Group’s
structure and business acquisitions.
Other: other required disclosures under Australian
Accounting Standards and IFRS.
Key estimates and judgements
In preparing this financial report, the Group is required to
make estimates, judgements and assumptions that affect
the reported amounts in the financial statements.
These estimates, judgements and assumptions are
continually evaluated, and are based on forecasts of
economic conditions which reflect expectations and
assumptions as at 30 June 2021 about future events that
the Directors believe are reasonable in the circumstances.
The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates
are significant to the financial statements:
Note 3:
Note 9:
Note 11:
Note 12:
Note 13:
Note 15:
Note 23:
Revenue
Working capital
Right-of-use assets
Agricultural assets
Intangible assets
Impairment of non-financial assets
Income tax
NOTE 1 – ABOUT THIS REPORT
Treasury Wine Estates Limited (‘the Company’) is a for profit
company incorporated in Australia and limited by shares
which are publicly traded on the Australian Securities
Exchange (ASX). The consolidated financial statements
comprise the Company and its controlled entities
(collectively, ‘the Group’).
The accounting policies that are critical to understanding
the financial statements are set out in this section.
Where an accounting policy is specific to one note,
the policy is described in the note to which it relates.
Basis of preparation
The consolidated financial statements are general
purpose financial statements prepared in accordance
with Australian Accounting Standards (AASBs) adopted
by the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001. The consolidated financial
statements comply with the International Financial
Reporting Standards (IFRS) adopted by the International
Accounting Standards Boards (IASB). They were authorised
for issue by the Board of Directors on 19 August 2021.
The financial statements are presented in Australian dollars
with all values rounded to the nearest tenth of one million
dollars unless otherwise stated, in accordance with ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191.
Notes to the financial statements
The notes include additional information required to
understand the financial statements that is material
and relevant to the operations, financial position and
performance of the Group.
Information is considered material and relevant if the
amount in question is significant because of its size, nature
or incidence or it helps to explain the impact of significant
changes in the business, for example, acquisitions and
asset write-downs.
Line items labelled ‘other’ on the face of the consolidated
statements comprise miscellaneous income, expenses,
assets, liabilities or cash flows which individually or
in aggregate are not considered material to warrant
additional disclosures.
Where applicable, comparative periods have been
adjusted to disclose comparatives on the same basis
as the current year.
The notes are organised into the following sections:
Earnings: focuses on the financial results and
performance of the Group. It provides disclosures relating
to income, expenses, segment information, material items
and earnings per share.
Working capital: shows the assets and liabilities generated
through trading activity. It provides information regarding
working capital management and analysis of the
elements of working capital.
78 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 1 – ABOUT THIS REPORT (CONTINUED)
Key estimates and judgements (continued)
COVID-19 considerations
The ongoing COVID-19 pandemic has increased the estimation uncertainty in the preparation of financial statements,
generally, due to the impact of the following factors:
• the extent and duration of actions by governments, businesses and consumers to contain the spread of the virus;
• the extent and duration of the economic impacts. This includes the disruption to capital markets, deteriorating credit,
higher unemployment, and changes in consumer discretionary spending behaviours; and
• the effectiveness of government measures that have and will be put in place to support businesses and consumers
through this disruption and economic downturn.
During F21, the Group experienced the following impacts on its operations and financial statements as a result
of these factors:
• Governments continued to take varying approaches to containment of the virus in each of TWE’s markets. In general,
retail and e-commerce channels remained open and other channels (including restaurants, bars, cellar doors and
travel retail) were partially or entirely closed with re-opening occurring at different rates across individual markets.
• In-home consumption remained higher during periods of lockdown, primarily through retail and e-commerce channels.
• Consumers continued to turn to well-known and trusted brands, which drove volumes of Commercial, Premium and
lower Luxury wines. Higher value Luxury wines were negatively impacted by lower consumption – driven primarily by the
closure of key Luxury channels.
• In the majority of TWE’s markets, governments maintained fiscal and economic stimulus packages of varying natures
during at least part of the year, some of which remain in place at 30 June 2021, and at the date of this report.
• Agricultural activities (including wine production) has generally been considered an essential service in all of the
Group’s key sourcing regions, with no material interruptions encountered through global operations.
In respect of this financial report, the impact of COVID-19 is primarily relevant to estimates of future performance which
is in turn relevant to the areas of impairment of non-financial assets (note 15), net realisable value of inventory (note 9),
recoverability of receivables (note 9) and recoverability of income tax losses (note 23). Other areas of estimates,
judgements and assumptions for the Group are not impacted by estimates of future performance.
In making estimates of future performance, the following assumptions and judgements in relation to the potential impact
of COVID-19 have been applied by the Group. Actual results may differ from these estimates under different assumptions
and conditions.
• Retail and e-commerce channels are assumed to remain open at the levels as at June 2021, in all regions.
• All regions will continue a phased ‘re-opening’ of most previously closed or partially closed channels (bars, restaurants,
cellar doors) towards pre-COVID-19 levels at a progressive rate over the course of F22, however travel retail is expected
to remain below pre-COVID-19 levels.
• In-home consumption, and therefore retail and e-commerce channel sales, are assumed to stay at levels generally
elevated against pre-COVID-19 conditions.
• Luxury wine consumption assumed to continue to progressively return to pre-COVID-19 levels over the course of F22.
• To the extent not yet phased out, government fiscal and economic stimulus packages are maintained, but phased
out as economies return to historical output levels.
• Agricultural activities (including wine production) continue to be considered an essential service in all of the Group’s
key sourcing regions.
As noted above, the Group assumes a trend of general recovery. Whilst further virus outbreaks may occur in some
regions, the progressive deployment of vaccines in key markets is expected to support recovery and the assumptions
applied by the Group.
Key assumptions and judgements have been stress tested for the impacts of COVID-19 with further downside sensitivity.
As a result, more extensive changes in assumptions have been considered and disclosed in the financial statements.
Further details on the estimates, judgements and assumptions applied by the Group within these Financial statements
are included within the relevant Notes, including sensitivities applied to ensure financial statements and disclosures
are appropriate.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 79
Notes to the consolidated financial statements:
About this report
For the year ended 30 June 2021
NOTE 1 – ABOUT THIS REPORT (CONTINUED)
Principles of consolidation
The consolidated financial statements include the
assets and liabilities of Treasury Wine Estates Limited
and its controlled entities as a whole at year-end and
the consolidated results and cash flows for the year.
A list of controlled entities (subsidiaries) is provided
in note 27.
An entity is regarded as a controlled entity when the
Company is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability
to affect those returns through power over the entity.
The rights of other investors to the results and equity
of the subsidiaries (called non-controlling interests)
are shown separately in the consolidated statement
of profit or loss and other comprehensive income,
consolidated statement of changes in equity and
consolidated statement of financial position respectively.
The financial information of the subsidiaries is prepared
for the same reporting period as the parent, using
consistent accounting policies. Intra-group balances
and transactions arising from intra-group transactions
are eliminated.
A change in the ownership interest of a subsidiary, without
a loss of control, is accounted for as an equity transaction.
Functional and presentation currency
The consolidated financial statements are presented
in Australian dollars. Each entity in the Group determines
its own functional currency and items included in the
financial statements of each entity are measured using
that functional currency. The major functional currencies
used throughout the Group include Australian Dollar (AUD),
United States Dollar (USD) and Great British Pound (GBP).
Other currencies used include the Canadian Dollar,
Euro, New Zealand Dollar, Singapore Dollar, Swedish
Krona, Norwegian Krone, Chinese Renminbi and South
African Rand.
Foreign group companies
As at the reporting date, the assets and liabilities of
overseas subsidiaries are translated into Australian dollars
at the rate of exchange ruling at the balance sheet date
and the income statement is translated at the average
exchange rates for the period. The exchange differences
arising on the translation are recognised in the foreign
currency translation reserve within equity.
When a foreign operation is sold, the cumulative
exchange difference in equity for this operation
is recognised in the consolidated statement of profit
or loss and other comprehensive income as part
of the gain and loss on sale.
Transactions and balances
Transactions in foreign currencies are initially recorded
in the functional currency of the relevant entity at the
exchange rates ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies are subsequently translated at the rate
of exchange ruling at the balance sheet date.
Exchange differences arising are recognised in the
consolidated statement of profit and loss and other
comprehensive income, except for gains or losses arising
on assets or liabilities that qualify for hedge accounting,
discussed further in note 24.
Tax charges and credits attributable to these exchange
differences are also recognised in equity.
Average exchange rates used in translating profit and loss
items in F21 are:
A$1 = US$ 0.747 (F20: US$ 0.671)
A$1 = GB£ 0.555 (F20: GB£ 0.553)
Year-end exchange rates used in translating financial
position items in F21 are:
A$1 = US$ 0.751 (F20: US$ 0.687)
A$1 = GB£ 0.543 (F20: GB£ 0.558)
Fair value measurement
The Group measures certain financial instruments,
including derivatives, and certain non-financial assets
such as agricultural assets, at fair value at each balance
sheet date.
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants in its principal or most
advantageous market at the measurement date. It is
measured using the assumptions that market participants
would use when pricing the asset or liability, assuming
that market participants act in their economic best
interest. A fair value measurement of a non-financial
item assumes it is put to its highest and best use.
The Group uses valuation techniques that are appropriate
in the circumstances and for which sufficient data is
available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.
Accounting standards prescribe a fair value hierarchy,
described as follows, based on the lowest level input that
is significant to the fair value measurement as a whole:
Level 1 – Quoted (unadjusted) market prices in active
markets for identical assets or liabilities.
Level 2 – Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is directly (i.e. as prices) or indirectly
(i.e. derived by prices) observable.
Level 3 – Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable.
Subsequent events
Since the end of the financial year, the Directors approved
a final 100% franked dividend of 13.0 cents per share.
This dividend has not been recognised as a liability
in the consolidated financial statements at 30 June 2021.
The Directors are not aware of any other matters or
circumstances that have arisen since the end of the
financial year which have significantly affected or
may significantly affect the operations of the Group,
the results of those operations or the state of affairs
of the Group in subsequent financial years.
80 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Segment accounting policies
Segment assets and liabilities
Segment assets and liabilities represent those working
capital and non-current assets and liabilities which
are located in the respective segments. Cash and
borrowings, other than lease liabilities, are not
considered to be segment assets/liabilities as they
are managed by our centralised treasury function.
Consistent with the use of EBITS for measuring profit,
tax assets and liabilities, which do not contribute
towards EBITS, are not allocated to operating segments.
Intersegment transactions
The price of an intersegment transaction is set at
an arm’s length basis. Whilst these transactions are
eliminated on consolidation, they are shown within
the segment revenue and EBITS to properly reflect the
segment of origin performance, including production.
Corporate charges
Unallocated corporate charges are reported in the
Corporate/unallocated segment. Net finance costs
are not allocated to segments as the Group’s financing
function is centralised through its treasury function.
Segment loans payable and loans receivable
Segment loans are initially recognised at the amount
transferred. Intersegment loans receivable and payable
that earn or incur non-market interest are adjusted
to fair value based on market interest rates.
Other
If items of revenue and expense are not allocated
to operating segments, then any associated assets
and liabilities are not allocated to segments either.
NOTE 2 – SEGMENT INFORMATION
The Group’s segments
The Group reports segment information on the same
basis as its internal management reporting structure
and consistent with the information used to organise
and manage the Group.
The reportable segments are based on the aggregation
of operating segments determined by the similarity of the
nature of products, the production process, the types of
customers and the methods used to distribute the products.
Presentation of segment results
Management EBITS
The principal profit metric for internal management
reporting is Management earnings before interest, tax,
SGARA and material items (EBITS). Corporate charges
are allocated to each segment on a proportionate
basis linked to segment revenue, head count or other
appropriate driver depending on the nature of the charge.
SGARA represents the difference between the fair value
of harvested grapes (as determined under AASB 141
Agriculture) and the cost of harvested grapes. The fair
value gain or loss is excluded from Management EBITS
so that earnings can be assessed based on the cost
of harvest, rather than their fair value. This approach
results in a better reflection of the true nature of TWE’s
consumer branded and FMCG business and improved
comparability with domestic and global peers. The F21
SGARA gain of $9.4 million reflects gains from the high
yielding 2021 Australian vintage and the unwinding of prior
period losses, partly offset by the impact of a significant
reduction in tonnage and yield from the 2020 Californian
vintage which result in a loss of $24.0 million.
The identified reportable segments in the Group
are below:
(i) Australia and New Zealand (ANZ)
This segment is responsible for the manufacture,
sale and marketing of wine within Australia and
New Zealand.
(ii) Europe, Middle, East and Africa (EMEA)
This segment is responsible for the manufacture,
sale and marketing of wine within Europe and Middle,
East and Africa.
(iii) Americas
This segment is responsible for the manufacture,
sale and marketing of wine within North America
and Latin America.
(iv) Asia
This segment is responsible for the sale and
marketing of wine within Asia.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 81
Notes to the consolidated financial statements:
Earnings
For the year ended 30 June 2021
NOTE 2 – SEGMENT INFORMATION (CONTINUED)
2021
Total revenue comprises:
Net sales revenue
Other revenue
Intersegment revenue
Total segment revenue
(excl other income/interest)
Management EBITS
SGARA gain/(loss)
Material items
Management EBIT
Net finance costs
Consolidated profit
before tax
Depreciation of property,
plant and equipment
and right-of-use assets
Amortisation of
intangible assets
Assets held for sale
Capital expenditure
(additions)
Segment assets
(excl intersegment assets)
Segment liabilities
(excl intersegment
liabilities)
ANZ
$m
Americas
$m
Asia
$m
EMEA
$m
Intersegment
elimination
$m
Total
segment
$m
Unallocated/
corporate
$m
Consolidated
$m
602.1
5.7
311.7
988.7
565.3
413.5
105.7
34.8
1.3
0.5
0.6
16.8
–
–
(363.8)
2,569.6
113.3
–
–
1.0
–
2,569.6
114.3
–
919.5
1,129.2
567.1
430.9
(363.8)
2,682.9
1.0
2,683.9
142.7
10.9
(17.9)
135.7
168.3
205.4
46.6
(0.5)
(67.6)
–
–
(1.0)
(0.8)
100.2
205.4
44.8
(51.1)
(70.7)
(5.2)
(3.3)
(0.4)
8.1
(2.7)
132.1
–
–
(1.6)
–
(98.7)
(13.7)
(2.4)
(4.9)
2,607.3
2,358.2
137.4
454.3
–
–
–
–
–
–
–
–
–
563.0
9.4
(86.3)
486.1
(52.7)
–
(2.2)
(54.9)
510.3
9.4
(88.5)
431.2
(73.5)
357.7
(130.3)
(4.1)
(134.4)
(4.7)
140.2
(11.6)
–
(16.3)
140.2
(119.7)
(9.4)
(129.1)
5,557.2
727.0
6,284.2
(363.8)
(779.1)
(77.8)
(105.5)
–
(1,326.2)
(1,366.9)
(2,693.1)
82 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 2 – SEGMENT INFORMATION (CONTINUED)
ANZ
$m
Americas
$m
Asia
$m
EMEA
$m
Intersegment
elimination
$m
Total
segment
$m
Unallocated/
corporate
$m
Consolidated
$m
20201
Total revenue comprises:
Net sales revenue
Other revenue
Intersegment revenue
Total segment revenue
(excl other income/interest)
Management EBITS1
SGARA gain/(loss)
Material items
Management EBIT1
Net finance costs
Consolidated profit
before tax1
Depreciation of property,
plant and equipment
and right-of-use assets
Amortisation of
intangible assets1
Assets held for sale
Capital expenditure
(additions)1
Segment assets
(excl intersegment assets)1
Segment liabilities
(excl intersegment
liabilities)
592.4
10.4
287.7
1,069.4
617.1
370.6
15.9
50.2
0.6
0.2
1.6
27.7
–
–
(365.8)
2,649.5
28.5
–
890.5
1,135.5
617.9
399.9
(365.8)
2,678.0
130.1
(43.5)
(25.8)
60.8
136.9
241.5
49.5
1.8
(8.0)
–
–
0.4
–
130.7
241.5
49.9
(52.6)
(79.8)
(4.5)
(3.0)
(0.6)
–
(3.6)
74.3
–
–
(1.6)
–
(90.8)
(24.4)
(1.2)
(1.4)
2,514.5
2,773.5
163.2
428.6
(348.4)
(819.0)
(68.3)
(97.7)
–
–
–
–
–
–
–
–
–
–
–
0.2
–
0.2
(45.4)
–
(2.8)
(48.2)
2,649.5
28.7
–
2,678.2
512.6
(41.3)
(36.6)
434.7
(85.9)
348.8
558.0
(41.3)
(33.8)
482.9
(139.9)
(3.8)
(143.7)
(5.8)
74.3
(13.8)
–
(19.6)
74.3
(117.8)
(10.0)
(127.8)
5,879.8
764.9
6,644.7
(1,333.4)
(1,715.2)
(3,048.6)
1.
Reported results restated for changes to accounting policies. Refer to note 32.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 83
Notes to the consolidated financial statements:
Earnings
For the year ended 30 June 2021
NOTE 2 – SEGMENT INFORMATION (CONTINUED)
Geographical segments
The presentation of geographical net sales revenue is based on the location of the selling entity.
Australia
United States of America
United Kingdom
Other geographical locations1
Total
Net sales revenue
2021
$m
1,113.2
1,000.3
345.5
110.6
2,569.6
2020
$m
1,180.4
1,080.3
286.4
102.4
2,649.5
1. Other than Australia, United States of America and the United Kingdom, sales of other countries are individually less than 10% of the Group’s
net sales revenue.
The presentation of non-current assets is based on the geographical location of the assets.
Australia
United States of America
United Kingdom
Other geographical locations
Total geographical non-current assets
Other non-current assets2
Consolidated non-current assets
2. Other non-current assets include financial derivative assets and deferred tax assets.
NOTE 3 – REVENUE
Revenue
Net sales revenue1
Other revenue
Total revenue
Non-current assets
2021
$m
2,006.5
1,713.6
146.4
154.0
4,020.5
206.4
4,226.9
Restated1
2020
$m
1,854.8
2,149.5
145.8
157.0
4,307.1
237.3
4,544.4
2021
$m
2020
$m
2,569.6
114.3
2,683.9
2,649.5
28.7
2,678.2
1. Net sales revenue is net of trade discounts and volume rebates.
Net sales revenue – types of products
The Group generates revenue through the sale of branded wines, principally as a finished, bottled product. The Group’s
wine portfolio includes some of the world’s leading Luxury, Premium and Commercial wine brands such as Penfolds,
Beringer, Lindeman’s, Wolf Blass, 19 Crimes, Chateau St Jean, Beaulieu Vineyard, Sterling Vineyards and Stags’ Leap.
The Group distributes wine to a range of customers across the world, with routes to market tailored by country.
Depending on the geography, wine is sold to distributors, wholesalers, direct to national retail chains, independent
retailers and on-premise outlets. The Group also has some sales direct to the consumer.
1.
Reported results restated for changes to accounting policies. Refer to note 32.
84 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 3 – REVENUE (CONTINUED)
Other revenue
The Group provides contract bottling services to third parties.
In F21 other revenue includes $14.8 million of insurance income in relation to damage caused by wildfires in the Americas
– refer to note 4 for details.
In F21 other revenue also includes revenue recognised for the sale of inventory to The Wine Group as part of the exit
of commercial brands in the Americas.
Sales approach
For F21, the Group had one major customer in the Americas whose revenues represented 8.7% (F20: 8.7%) of reported
net sales revenue, and one major customer in Australia whose revenue represented 8.1% (F20: 7.8%) of reported net
sales revenue.
Financing components
The Group does not have any contracts where the period between the transfer of the promised product or services
to the customer and payment by the customer exceeds one year. Consequently, the Group does not adjust any of the
transaction prices for the time value of money.
Accounting policies
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts
collected on behalf of third parties. The Group’s contracts with customers generally include one performance obligation.
Revenue from the sale of products or services is recognised at the point in time when control over a product or service is
transferred to the customer, generally on delivery. The Group recognises revenue when it transfers control over a product
or service to a customer. Revenue is recorded net of sales discounts and rebates, duties and taxes. Payment terms vary
by customer. The following specific criteria are also applied:
Wine
Revenue is recognised in a manner that depicts transfer of control of goods to customers at the amount that reflects
consideration the business expects to be entitled to in exchange for those goods. Sales to national retail chains,
domestic distributors, independent retailers and on-premise outlets are usually recognised when goods are delivered.
Sales to international customers are recognised based on the international commercial terms the goods are shipped
under, but typically when goods are despatched. This is also the case for some national retail chains that manage
their own distribution networks.
Bottling services
Revenue is recognised when the relevant service has been completed.
Key estimate and judgement:
Trade discounts and volume rebates
Products are often sold with volume discounts and other rebates. Sales are recorded based on the consideration specified
in the sales contracts or terms, net of the estimated discount or rebate at the time of sale. These discounts or rebates are
considered variable consideration and are accounted for in determining the transaction price of a contract. The method
used by the Group to estimate discounts and rebates is the most likely amount. Accumulated experience is used to estimate
and provide for the discounts and rebates based on anticipated purchases and depletions.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 85
Notes to the consolidated financial statements:
Earnings
For the year ended 30 June 2021
NOTE 4 – OTHER EARNINGS DISCLOSURES
Net foreign exchange gains
Salaries and wages expense
Implementation costs of cloud computing
Share based payments expense
Items recognised as material items – refer note 5
Restructuring and redundancy costs
(Write-down)/reversal of write-down of assets
Net profit on sale of property, plant and equipment
Other items
Restructuring and redundancy costs
(Write-down)/reversal of write-down of assets
Insurance income
Net profit on sale of property, plant and equipment
Total other gains and losses
2021
$m
1.9
(337.7)
(6.6)
(5.0)
(30.9)
(95.8)
38.2
(1.9)
(54.1)
62.4
1.4
(80.7)
2020
$m
0.5
(404.1)
(22.1)
(10.9)
(30.6)
(6.0)
–
(10.1)
(10.0)
–
42.4
(14.3)
In F21 a winery and vineyards were damaged by wildfires in the Americas. The Group’s insurance policies provide coverage
for damaged assets, lost profits and business interruption suffered as a result of the wildfires. The final claim is expected
to be settled in F22. The following amounts have been recognised in F21 in relation to the matter:
Item
Description
Statement of
Comprehensive Income
Statement of
financial position
Statement of
Cash Flows
Insurance
income
Write down of
damaged assets
Income recognised under
the terms of the Group’s
insurance policies for
reimbursement of the
cost to replace or repair
damaged assets,
business interruption
and lost profits.
The cost of inventory
and property, plant and
equipment damaged.
$14.8m
Other revenue
$42.1m Other
$20.3m
$47.6m
Other income/
(expenses)
receivables
Receipts from
customers
($8.1m)
Cost of sales
–
–
–
–
Repair costs for
damages assets
Estimated costs to repair
damaged leased assets.
($46.0m) Other income/
($35.9m) Provisions
($10.1m)
(expenses)
Payments to
suppliers,
governments
and employees
In F21 TWE received $0.3 million in automatic government support payments in Asia (F20: $0.5 million), the majority of
which has been donated to local causes. TWE has not received, nor filed an application for JobKeeper support in Australia.
Accounting policies
Employee benefits
Employee benefits include wages, salaries, annual leave, bonuses, non-monetary benefits and share based
payment expenses. Further details of Group policy on measuring employee benefits are set out in note 16.
Superannuation
Employees are members of defined contribution superannuation schemes. Superannuation contributions are
recognised as an expense when they are due and payable.
Property, plant and equipment income
Revenue from the sale of property, plant and equipment is recognised when an executed contract
becomes unconditional.
Other income
Revenue is recognised on an accruals basis in accordance with the substance of the relevant agreements.
Insurance income
Revenue is recognised when recovery is virtually certain.
86 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 5 – MATERIAL ITEMS
The following individually material items are included within the consolidated statement of profit or loss and other
comprehensive income.
Individually material items included in profit before income tax:
Divestment of US brands and assets
Restructuring and redundancy (costs)
(Write-down)/reversal of write-down of intangible assets
(Write-down)/reversal of write-down of assets held for sale
(Write-down)/reversal of inventory
(Write-down)/reversal of leased assets
Net profit on sale of property, plant and equipment
South Australian luxury winery expansion
Restructuring and redundancy (costs)
(Write-down)/reversal of write-down of assets
Overhead and supply chain restructure
Restructuring and redundancy (costs)
Total material items (before tax)
Tax effect of material items
Total material items (after tax)
2021
$m
2020
$m
(11.3)
(64.3)
(6.6)
(11.0)
(7.3)
38.2
(1.2)
(6.6)
(18.4)
(88.5)
22.4
(66.1)
–
–
–
–
–
–
(19.3)
(6.0)
(11.3)
(36.6)
10.4
(26.2)
In F21, material items reflect the restructure and review of commercial operations and assets in the Americas, the costs
pertaining to the long-term investment in Luxury winemaking infrastructure in South Australia, and costs relating to the
Group’s overhead and supply chain restructure.
In F20, material items reflect the restructure and review of commercial operations and assets in the Americas and the
costs pertaining to the long-term investment in Luxury winemaking infrastructure in South Australia.
Material items
Material items are defined as those items of income or expense which have been determined as being sufficiently
significant by their size, nature or incidence and are disclosed separately to assist in understanding the Group’s
financial performance.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 87
Notes to the consolidated financial statements:
Earnings
For the year ended 30 June 2021
NOTE 6 – DIVIDENDS
Dividends declared and paid on ordinary shares
Final dividend for F20 of 8.0 cents per share 100% franked
(F19: 20.0 cents per share – 100% franked)A
Interim dividend for F21 of 15.0 cents per share 100% franked
(F20: 20.0 cents per share – 100% franked)B
Dividends approved after balance date
Since the end of the financial year, the Directors approved a final dividend
of 13.0 cents per share (F20: 8.0 cents) 100% franked (F20: 100% franked).
This dividend has not been recognised as a liability in the consolidated
financial statements at year-end.
2021
$m
2020
$m
57.7
108.2
165.9
143.8
144.0
287.8
93.8
57.7
A The F20 final dividend includes an amount of $2.6 million (F19 final dividend: $3.7 million) for shares issued under the Dividend Reinvestment Plan.
B The F21 interim dividend includes an amount of $4.6 million (F20 interim dividend: $7.8 million) for shares issued under the Dividend Reinvestment Plan.
Details in relation to franking credits are included in note 23.
NOTE 7 – EARNINGS PER SHARE
Basic EPS
Basic EPS (cents) based on net profit attributable to members
of Treasury Wine Estates Limited
Diluted EPS
Diluted EPS (cents) based on net profit attributable to members
of Treasury Wine Estates Limited
Weighted average number of shares
Weighted average number of ordinary shares on issue
used in the calculation of basic EPS (in thousands)
Effect of potentially dilutive securities
Deferred shares (in thousands)
Weighted average number of ordinary shares on issue
used in the calculation of diluted EPS (in thousands)
Earnings reconciliation
Basic and diluted EPS
Net profit
Net profit attributable to non-controlling interests
Net profit attributable to members of Treasury Wine Estates Limited
used in calculating basic and diluted EPS
2021
cents per
share
Restated1
2020
cents per
share
34.7
34.1
34.6
34.0
Number
Number
721,406
719,893
1,947
1,460
723,353
721,353
$m
250.0
–
250.0
$m
245.4
–
245.4
1.
Reported results restated for changes to accounting policies. Refer to note 32 for transition impacts.
88 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 7 – EARNINGS PER SHARE (CONTINUED)
Calculation of earnings per share
Earnings per share (EPS) is the amount of post-tax profit attributable to each share.
Basic EPS is calculated by dividing the net profit after income tax attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year.
Diluted EPS is determined by dividing the profit attributable to ordinary shareholders after tax by the weighted average
number of ordinary shares outstanding during the period, adjusted for the effects of dilutive potential ordinary shares
in the employee Long-Term Incentive Plan and Restricted Equity Plan (see note 22).
NOTE 8 – NET CASH FLOWS FROM OPERATING ACTIVITIES
Reconciliation of net cash flows from operating activities to profit after income tax
Profit for the year
Depreciation and amortisation
SGARA (gain)/loss
Write-down/(reversal of write-down) of assets
Net profit on disposal of non-current assets
Share based payments expense
Other
Net cash provided by operating activities before change in assets and liabilities
Change in working capital and tax balances, net of effects from
acquisition/disposal of controlled entities
Receivables
Inventories
Derivative financial assets/liabilities
Payables
Net tax balances
Provisions
Net cash flows from operating activities
2021
$m
250.0
150.7
(9.4)
92.9
(39.6)
5.0
(2.4)
447.2
4.8
(22.7)
4.5
9.2
(10.7)
39.4
471.7
Restated1
2020
$m
245.4
163.3
41.3
16.0
(42.4)
10.9
(2.9)
431.6
69.7
(38.0)
(0.4)
(42.4)
(64.7)
11.1
366.9
1.
Reported results restated for changes to accounting policies. Refer to note 32.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 89
Notes to the consolidated financial statements:
Working capital
For the year ended 30 June 2021
NOTE 9 – WORKING CAPITAL
Current
Cash and cash equivalents
Receivables (a)
Inventories (b)
Trade and other payables
Total current
Non-current
Inventories (b)
Total non-current
(a) Receivables
Current
Trade receivables
Allowance for expected credit loss
Other receivables
Prepayments
Total current receivables
(b) Inventories
Current
Raw materials and stores
Work in progress
Finished goods
Total current inventories
Non-current
Work in progress
Finished goods
Total non-current inventories
Total inventories
2021
$m
2020
$m
448.1
621.3
839.7
(703.6)
1,205.5
449.1
553.5
1,017.4
(682.1)
1,337.9
1,056.8
1,056.8
1,059.2
1,059.2
2021
$m
2020
$m
487.1
(9.5)
107.4
36.3
621.3
2021
$m
48.1
348.9
442.7
839.7
747.6
309.2
1,056.8
478.2
(9.6)
45.2
39.7
553.5
2020
$m
66.6
459.3
491.5
1,017.4
744.1
315.1
1,059.2
1,896.5
2,076.6
Other receivables include $42.1 million receivable under the Group’s insurance policies in connection with a winery and
vineyards that were damaged by wildfires in the Americas in F21. Refer to note 4 for further details.
Inventories of wine stocks are classified between current and non-current based on sales projections for the ensuing year.
Inventories recognised as an expense during the year and included in cost of sales amounted to $1,397.5 million
(F20: $1,511.7 million). In F21, the write-down of inventories to net realisable value amounted to $63.7 million (F20: $21.0 million).
Of this amount $11.0 million was recognised in material items relating to the divestment of US brands and assets –
refer note 5. A further $5.6 million relates to inventory written off as a result of damage caused by wildfires in the Americas,
the value of which has been recovered under the Group’s insurance policies.
Reversals of write-downs amounted to $1.0 million (F20: $1.2 million). These amounts are included in cost of sales.
90 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 9 – WORKING CAPITAL (CONTINUED)
Accounting policies
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits held at call with banks, cash in transit, short-term
deposits and investments with maturities of three months or less.
Cash assets and cash liabilities are offset and presented as a net amount in the consolidated statement of financial
position when the Group has a legally enforceable right to offset or intent to settle on a net basis.
For the purposes of the consolidated statement of cash flows, cash and cash equivalents are disclosed net
of outstanding bank overdrafts.
Receivables
Trade receivables are initially recognised at invoice value (fair value) and subsequently measured at amortised cost,
less an allowance for expected credit losses.
Credit terms are generally between 30 – 120 days depending on the nature of the transaction. Expected credit losses
are calculated by utilising a provision matrix where loss rates are calculated based on days past due for groupings
of various customer segments that have similar loss patterns (for example geography, product type and rating).
The provision matrix is initially determined by the Group’s historical observed loss rates and calibrated for forward
looking information. Loss rates will be updated at each reporting date based on changes in observed default rates
and changes in forward looking information.
Inventories
Inventories are valued at the lower of their cost (using average or FIFO basis) or estimated net realisable value.
The cost of raw materials is their purchase price or, in the case of grapes sourced from Group owned vineyards,
fair value (see note 12 for further details). The cost of manufactured goods is determined on a consistent basis and
is made up of the raw materials and direct labour used in manufacture. It also includes other direct costs and related
production overheads based on normal operating capacity.
Net realisable value represents the estimated selling price in the ordinary course of business less estimated costs
of completion and estimated costs to be incurred in marketing, selling and distribution.
Trade and other payables
Trade and other payables including accruals are recorded when the Group is required to make future payments
as a result of purchases of goods or services. Trade and other payables are carried at amortised cost.
Key estimates and judgements:
Trade discounts and volume rebates
Key estimates relate to the amount accrued for discounts and rebates. Products are often sold with trade discounts and
volume rebates. Sales are recorded based on the price specified in the sales contracts or terms, net of the estimated
discount or rebate at the time of sale. Accumulated experience is used to estimate and provide for the discounts and
rebates based on anticipated purchases and depletions.
Net realisable value of inventory
The period over which some wine inventories are converted from raw materials to finished goods can be a significant
length of time. Failure to forecast demand effectively may result in excess inventories or missed revenue opportunities.
Forecast demand and market prices can vary significantly over the holding period up to the likely date of sale.
Estimating the most likely conditions at the expected point of sale is therefore more challenging over the longer term.
Non-current inventory is $1,056.8 million (F20: $1,059.2 million) and its estimated selling price is therefore a key estimate.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 91
Notes to the consolidated financial statements:
Operating assets and liabilities
For the year ended 30 June 2021
NOTE 10 – PROPERTY, PLANT AND EQUIPMENT
Land
2020
$m
2021
$m
Freehold
buildings
Leasehold
buildings
Plant and
equipment
2021
$m
2020
$m
2020
$m
2021
$m
2020
$m
2021
$m
Total
2020
$m
Cost
347.2
381.6
483.3
509.9
Projects in Progress
–
–
–
–
44.4
1,709.7
1,803.9
2,579.8
2,739.8
–
163.1
128.2
163.1
128.2
2021
$m
39.6
–
–
–
–
–
(2.8)
(2.3)
20.7
2.0
22.3
0.7
–
–
–
–
–
(41.6)
(41.7)
(222.7)
(256.6)
(23.8)
(23.7)
(1,132.3)
(1,148.6)
(1,420.4)
(1,470.6)
305.6
339.9
260.6
253.3
15.8
20.7
740.5
783.5
1,322.5
1,397.4
339.9
341.9
253.3
250.4
–
–
3.3
9.7
34.1
–
7.0
3.1
(20.7)
(15.9)
(8.3)
(0.2)
–
(0.5)
(0.1)
–
6.4
(9.0)
(0.1)
–
–
–
(0.4)
(7.9)
–
(0.3)
(1.4)
(8.7)
783.5
81.7
–
755.3
108.8
4.0
1,397.4
1,369.9
117.8
–
119.8
16.8
(20.2)
(3.0)
(49.2)
(19.1)
–
(1.8)
(6.4)
(6.2)
–
–
(2.3)
(15.5)
(4.5)
(4.5)
(2.6)
(67.2)
(70.4)
(7.8)
(77.4)
(6.0)
(81.7)
(13.0)
3.6
(10.2)
3.4
(1.8)
0.3
(31.0)
5.9
(56.0)
13.2
305.6
339.9
260.6
253.3
15.8
20.7
740.5
783.5
1,322.5
1,397.4
Accumulated
depreciation
and impairment
Carrying amount
at end of year
Reconciliations
Carrying amount
at start of year
Additions
Business acquisition
(Transfer to)/from
Assets held for sale
(Transfer to)/from
other asset classes
Disposals
(Write-downs)/
write-downs reversal
Depreciation expense
Foreign currency
translation
Carrying amount
at end of year
Included within plant and equipment are ‘Projects in Progress’ of $163.1 million (F20: $128.2 million), which are assets under
construction and therefore not yet depreciated. The cost of construction includes the cost of materials used in construction,
direct labour on the project, and an allocation of overheads. The Group recognised $7.8 million write-downs (F20: $6.0 million
write-downs) for property, plant and equipment during the year.
Accounting policies
Property, plant and equipment is initially recorded at cost and then reduced by accumulated depreciation and any
impairment losses.
Plant and equipment is depreciated so that the assets are written down to their residual value over their useful lives,
using a reducing balance or straight-line method depending on the nature of the asset. Assets that relate to leases
are written-off over the period of the lease or useful life, whichever is the shorter. Residual values, useful lives and
amortisation methods are reviewed annually and adjusted when required.
Depreciation expense is included in ‘costs of sales’, ‘selling expenses’ and ‘administration expenses’ in the consolidated
statement of profit or loss and other comprehensive income.
The depreciation rates used for each class of asset are as follows:
Freehold buildings
Leasehold buildings
Plant and equipment
1.5% – 10.0%
10.0% – 20.0%
3.3% – 40.0%
Costs incurred in maintaining agricultural assets are recognised as an expense as incurred.
Derecognition and disposal
When an asset is sold, scrapped or is no longer of use to the business it is derecognised. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net proceeds and the carrying amount
of the asset) is recorded in the period the asset is derecognised in the consolidated statement of profit or loss
and other comprehensive income.
92 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 10 – PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Vineyard resources
Australia
United States
New Zealand
Italy
France
2021
hectares
2020
hectares
8,762
3,200
498
166
60
12,686
8,676
3,213
498
138
60
12,585
The area under vine shown above:
• Includes 3,111 hectares (F20: 3,263 hectares) under direct leasing arrangements and 10 hectares (F20: 10 hectares)
of olive groves in Tuscany, a region of Italy.
• Yielded 110,701 tonnes of grapes (F20: 76,881 tonnes).
Harvests generally occur in September – October in the Northern Hemisphere and February – May in the
Southern Hemisphere.
NOTE 11 – RIGHT-OF-USE ASSETS
The Group has leases for vineyards, buildings, equipment and motor vehicles. The Group’s lease arrangements have
durations up to 25 years but may have extension options as described in (d) below.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and
short-term leases, including IT equipment and oak barrels. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease term.
(a) Right-of-use assets
2021
$m
Land
2020
$m
2021
$m
2020
$m
Leasehold
buildings
Plant and
equipment
Cost
461.3
498.2
245.7
249.0
Accumulated depreciation
and impairment
(183.0)
(173.9)
Carrying amount at end of year
278.3
324.3
(90.4)
155.3
(75.8)
173.2
Reconciliations
Carrying amount at start of year
324.3
336.1
Additions
Disposals
Depreciation and
impairment expense
Foreign currency translation
5.8
–
(26.1)
(25.7)
Carrying amount at end of year
278.3
173.2
24.6
(12.9)
179.0
29.4
(7.6)
11.2
–
(28.6)
(22.5)
(30.9)
5.6
324.3
(7.1)
155.3
3.3
173.2
2021
$m
36.7
(21.9)
14.8
19.5
5.1
–
(8.4)
(1.4)
14.8
2020
$m
45.1
2021
$m
Total
2020
$m
743.7
792.3
(25.6)
(295.3)
(275.3)
19.5
448.4
517.0
20.8
8.6
–
(10.1)
0.2
19.5
517.0
35.5
535.9
49.2
(12.9)
(7.6)
(57.0)
(34.2)
448.4
(69.6)
9.1
517.0
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 93
Notes to the consolidated financial statements:
Operating assets and liabilities
For the year ended 30 June 2021
NOTE 11 – RIGHT-OF-USE ASSETS (CONTINUED)
(b) Amounts recognised in the statement of profit or loss and other comprehensive income
Expenses relating to variable lease payments not included in lease liabilities
Interest expense on lease liabilities
Expenses relating to low-value leases, excluding short-term leases of low-value items
Expenses relating to short-term leases
(c) Amounts recognised in statement of cash flows
Total cash out flow for lease liabilities
2021
$m
155.5
34.4
36.6
0.1
2021
$m
87.2
2020
$m
135.0
39.7
31.0
0.2
2020
$m
95.1
(d) Extension options
Some property and vineyard leases contain extension options exercisable by the Group up to the end of the non-cancellable
contract period. These options are used to provide operational flexibility across the Group. The extension options held
are exercisable only by the Group and not the lessors. The Group has estimated that the potential future lease payments,
should it exercise the extension option, would result in an increase lease liability of $798.8 million (F20: $811.0 million).
(e) Variable lease payments
Certain contractual arrangements may contain both lease and non-lease components. Non-lease components are
distinct elements of a contract that are not related to securing the use of the leased asset, such as inventory, common
area maintenance, and other management costs. The Group has elected to measure the amount disclosed in relation
to variable leases for these arrangements by combining the lease and non-lease components.
Certain leases include variable lease payments, including payments that depend on an index or rate, as well as variable
payments for items such as grapes, labour, property taxes, insurance, maintenance, and other operating expenses
associated with leased assets. Certain grape purchasing arrangements include variable payments based on actual
tonnage and price of grapes that will vary depending on certain factors, including weather, time of harvest, overall market
conditions, and the agricultural practices and location of the vineyard. Such variable lease payments are excluded from
the calculation of the right-of-use asset and are recognised in the period in which the obligation is incurred.
Accounting policies
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses
the definition of a lease in AASB 16 Leases.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs
to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date
to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the
end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option.
In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined
on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing
sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
94 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 11 – RIGHT-OF-USE ASSETS (CONTINUED)
Accounting policies (continued)
Lease payments included in the measurement of the lease liability comprise the following:
• fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable under a residual value guarantee; and
• the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments
in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties
for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if there is a change in the
Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes
its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised
in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
The Group presents right-of-use assets as ‘right-of-use assets’ and lease liabilities in ‘borrowings’ in the consolidated
statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and
short-term leases, including IT equipment and oak barrels. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease term.
Key estimates and judgements:
Right-of-use assets
The Group has applied judgement in determining the interest rates used in the discount rate and in determining the
term of a lease, which is based on the likelihood of the Group’s ability to renew the lease and having regard for terms
equivalent to those that currently exit.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 95
Notes to the consolidated financial statements:
Operating assets and liabilities
For the year ended 30 June 2021
NOTE 12 – AGRICULTURAL ASSETS
Agricultural assets
Total agricultural assets
Reconciliations
Carrying amount at start of year
Fair value increase
Transfers to inventory
Foreign currency translation
Carrying amount at end of year
2021
$m
33.8
33.8
34.1
36.0
(34.1)
(2.2)
33.8
2020
$m
34.1
34.1
29.4
34.1
(29.9)
0.5
34.1
Grape growing and sourcing
The Group has a variety of sources of fruit including owned and leased vineyards, contracted growers and the bulk
wine market.
This approach provides flexibility through the economic cycle and assists with managing the risks arising from agricultural
factors beyond the Group’s control such as pests, disease and extreme weather conditions.
The Group’s owned vineyards ensure access to super premium fruit from key viticultural regions including the Barossa Valley
and Coonawarra in Australia, Marlborough in New Zealand and the Napa and Sonoma Valleys in California. These vineyards
contribute to some of the Group’s most prestigious wines.
Accounting policies
The agricultural assets of the Group (i.e. grapes) are measured at their fair value, less estimated point of sale costs.
The fair value adjustment during the year is recognised within ‘Other expenses’ in the consolidated statement of profit
or loss and other comprehensive income.
Harvested grapes are transferred to inventory initially at fair value and are then subsequently accounted for in the cost
of inventory (see note 9).
Fair value determination
The valuations of agricultural assets are Level 2 fair value measurements under the Group’s accounting policy
(see note 1), with the principal inputs being:
Grapes prior to harvest
Estimated based on the expected yields per hectare, estimated harvest costs and the anticipated market price
of grapes.
Harvested grapes
Determined by reference to the weighted district average of grape prices for each region for the current vintage.
Prices vary with the grade quality of grapes produced in each region.
Key estimate and judgement:
Fair value of grapes
Key to estimating the value of grapes is the following:
• Yield estimates;
• The estimated harvest costs;
• Market prices for grapes; or
• The quality of grapes, including the impacts on harvested grapes of weather, agricultural practices and location
of the vineyard.
96 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 13 – INTANGIBLE ASSETS
Brand names
and licences
IT development
costs
Goodwill
Cost
Projects in progress at cost
Accumulated amortisation
and impairment
2021
$m
2020
$m
1,368.5
1,462.1
–
–
2021
$m
117.2
20.8
(543.2)
(509.7)
(85.3)
Carrying amount at end of year
825.3
952.4
52.7
Reconciliations
Carrying amount at start of year1
Additions
Business acquisitions
(Transfers to)/from assets held for sale
Amortisation and impairment expense
Foreign currency translation
952.4
947.1
0.5
–
(21.5)
(65.8)
(40.3)
–
–
–
(3.5)
8.8
Carrying amount at end of year
825.3
952.4
58.4
10.8
–
–
(15.1)
(1.4)
52.7
Restated1
2020
$m
2021
$m
2020
$m
2021
$m
Total
Restated1
2020
$m
104.9
25.2
(71.7)
58.4
66.0
8.0
–
–
(16.1)
0.5
58.4
898.3
903.8
2,384.0
2,470.8
–
–
20.8
25.2
(620.8)
(620.5)
(1,249.3)
(1,201.9)
277.5
283.3
1,155.5
1,294.1
283.3
279.1
1,294.1
1,292.2
–
–
–
–
(5.8)
–
3.8
–
–
0.4
11.3
–
(21.5)
(80.9)
(47.5)
8.0
3.8
–
(19.6)
9.7
277.5
283.3
1,155.5
1,294.1
Goodwill is allocated to the Cash Generating Units (CGUs) or group of CGUs (see note 15 for further details) that are
expected to benefit from the synergies of the combination. The allocation of intangible (other than IT development costs)
is as follows:
Goodwill
Carrying amount at start of year
Business acquisitions
Foreign currency translation
Carrying amount at end of year
Brand names and licences
2021
$m
180.6
–
(0.2)
180.4
ANZ
2020
$m
181.5
–
(0.9)
180.6
Americas
2021
$m
2020
$m
78.0
–
(6.1)
71.9
76.9
–
1.2
78.1
Europe
2020
$m
Total
2020
$m
2021
$m
20.7
3.8
0.1
24.6
283.3
279.1
–
(5.8)
3.8
0.4
277.5
283.3
2021
$m
24.7
–
0.5
25.2
Carrying amount at start of year
479.2
480.8
469.8
462.9
3.4
3.4
Additions
Amortisation and impairment expense
(Transfers to)/from assets held for sale
Foreign currency translation
0.5
(1.5)
–
–
–
(1.5)
–
(0.1)
–
(64.3)
(21.5)
(40.2)
–
(2.0)
–
8.9
Carrying amount at end of year
478.2
479.2
343.8
469.8
–
–
–
(0.1)
3.3
952.4
0.5
(65.8)
(21.5)
(40.3)
947.1
–
(3.5)
–
8.8
–
–
–
–
3.4
825.3
952.4
1.
Reported results restated for changes to accounting policies. Refer to note 32.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 97
Notes to the consolidated financial statements:
Operating assets and liabilities
For the year ended 30 June 2021
NOTE 13 – INTANGIBLE ASSETS (CONTINUED)
Key estimate and judgement:
Useful life of brand names
In assessing whether a brand has a finite or indefinite useful life, the Group makes use of information on the long-term
strategy for the brand, the level of growth or decline of the markets that the brand operates in, the history of the market
and the brand’s position within that market.
If a brand is assessed to have a finite life, the Group will use judgement in determining the useful life of the brand
including the period over which expected cash flows will continue to be derived in making that decision.
Accounting policies
Brand names and licences
Brand names are recognised as assets when purchased individually and (primarily) as part of the allocation of the
purchase price when the Group acquires other businesses. Internally generated brand names are not capitalised
and expenditure incurred in developing, maintaining or enhancing brand names is charged to profit or loss in the
year incurred.
Brand names are initially recognised at cost when purchased individually and at fair value when acquired with
a business. This fair value is determined by reference to independent valuations.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any
accumulated impairment losses.
Goodwill
Goodwill arises on the acquisition of businesses and represents the difference between the purchase price and share
of the net assets of the acquired business, recorded at fair value.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not
amortised but is tested for impairment at least annually (see note 15).
IT development and software
Other than in relation to Software-as-a-Service (SaaS) arrangement, costs incurred in developing information
technology (IT) products or systems and costs incurred in acquiring software and multi-year licenses are capitalised
as intangible IT assets. They include the cost of purchased software and internal labour and contractors used in the
development of software.
IT assets are carried at cost less any accumulated amortisation and are amortised over their expected useful life
(2-10 years) on a straight-line basis. Amortisation is included in ‘Other expenses’ in the consolidated statement
of profit or loss and other comprehensive income.
SaaS arrangements are service contracts providing the Group with the right to access the cloud provider’s
application software over the contract period. The following outlines the accounting treatment of implementation
costs incurred in relation to SaaS arrangements:
Recognise as an operating expense
over the term of the service contract
• Fee for use of application software
• Customisation costs only when
‘not distinct’ and undertaken
by SaaS vendor
Recognise as an operating expense
as the service is received
• Configuration costs
• Data conversion and testing
• Testing costs
• Training costs
Costs incurred for the development of software code that enhances or modifies, or creates additional capability to,
existing on-premise systems and meets the definition of and recognition criteria for an intangible asset are recognised
as intangible IT assets.
98 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 14 – ASSETS AND DISPOSAL GROUPS HELD FOR SALE
Assets and disposal groups held for sale
Total assets and disposal groups classified as held for sale
2021
$m
140.2
140.2
2020
$m
74.3
74.3
Assets held for sale comprise property, plant and equipment and related deferred tax assets and liabilities identified
by the Group to be recovered through sale.
Management are committed to a plan to sell a number of surplus assets in America and ANZ, including vineyards and
wine making facilities, related property, plant and equipment, inventory and intangible assets. Accordingly, the vineyards
and facilities have been presented as disposal groups held for sale.
Impairment losses relating to the disposal group
Impairment losses of $6.6 million (F20: Nil) for the write down of the disposal group to the lower of its carrying amount
and its fair value less costs to sell have been included in ‘other expenses’ in the consolidated statement of profit or loss
and other comprehensive income. Refer to note 4 for other earnings disclosures.
Accounting policies
Non-current assets are classified as held for sale if their value will be recovered principally through their sale,
rather than through ongoing use within the business.
Assets are not depreciated or amortised while they are classified as held for sale. They are valued at the lower
of their carrying amount and fair value less costs to sell with an impairment loss recognised for any difference.
A gain is recognised for any subsequent increase in value, but not in excess of any cumulative impairment loss
previously recognised. Any gain or loss not previously recognised by the date of the sale of the non-current asset
is recognised at that point. The fair values of the assets based on independent market appraisals exceed the
assets’ carrying values.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 99
Notes to the consolidated financial statements:
Operating assets and liabilities
For the year ended 30 June 2021
NOTE 15 – IMPAIRMENT OF NON-FINANCIAL ASSETS
In F21 the recoverable amounts of cash generating units (CGUs) exceed their carrying values and as a result no impairment
has been recognised (F20: Nil). There were no indications that previously recognised impairment losses should be reversed
(F20: Nil). The recoverable amount was determined through a value in use calculation. The write down of assets disclosed
in note 4 relate to assets for which their valuation was tested independently of the CGUs in accordance with other
accounting policies.
The Group’s CGUs are consistent with the prior period and are:
• Americas;
• Europe; and
• Australia and New Zealand (ANZ).
Accounting policies
Timing of Impairment Testing
The Group tests property, plant and equipment and intangible assets for impairment:
• At least annually for goodwill and indefinite life brands; and
• Where there are indications that an asset may be impaired; or
• Where there is an indication that previously recognised impairments may have changed.
Impairment losses are recognised in the consolidated statement of profit or loss and other comprehensive income.
Approach to Impairment Testing
If the asset does not generate independent cash inflows and its value in use cannot be estimated to be close to its fair
value, the asset is tested for impairment as part of the CGU to which it belongs.
When an asset’s (or CGU’s) carrying value exceeds its recoverable amount, it is impaired. Recoverable amount is the
higher of the asset’s (or CGU’s) fair value less costs of disposal or value in use.
Fair value is determined in accordance with the accounting policy set out in note 1.
In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
Reversals of Impairment
If there is an indicator that a previously recognised impairment loss no longer exists or has decreased, recoverable
amount is estimated. If there has been a change in the estimates used to determine an asset’s recoverable amount
since an impairment loss was recognised, the carrying value of the asset is increased to its recoverable amount
(limited to the amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years).
Any reversal is recognised in the consolidated statement of profit or loss and other comprehensive income with an
adjustment to depreciation in future periods to allocate the asset’s revised carrying value, less any residual value,
on a systematic basis over its remaining useful life. The Group does not reverse impairments recognised for goodwill.
100 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 15 – IMPAIRMENT OF NON-FINANCIAL ASSETS (CONTINUED)
Key estimate and judgement:
Impairment testing key assumptions
The Group has estimated recoverable amount based on value in use at 30 June 2021. Key estimates and judgements include:
Cash flow forecasts
Cash flow forecasts are based on the Group’s most recent five-year financial plans approved by the Board.
Key assumptions in the cash flow forecasts include sales volume growth, cost of sales and cost of doing business.
The Group’s assumptions regarding sales volume growth and costs of doing business are based on expectations of the
market demand and past experience. The assumption on cost of sales is based on expectation about future vintage
costs which assume continuity of sourcing and access to fruit.
These estimates, judgements and assumptions are based on forecasts of economic conditions which reflect expectations
and assumptions as at 30 June 2021 about future events that the Directors believe are reasonable in the circumstances.
Long-term growth rates
Cash flow forecasts beyond a five-year period are extrapolated using a growth rate range of 2.0% to 3.0% (F20: 2.0% to 3.0%).
Growth rates are specific to individual CGUs and reflect expected future market and economic conditions.
Discount rates
The Group applies a post-tax discount rate to post-tax cash flows as the valuation calculated using this method
closely approximates applying pre-tax discount rates to pre-tax cash flows. The post-tax discount rates incorporate
a risk-adjustment relative to the risks associated with the net post-tax cash flows being achieved. The following pre-tax
discount rates were applied:
Americas
Europe
ANZ
2021
9.6%
8.4%
10.4%
2020
9.4%
9.5%
11.0%
Exchange rates
Cash flow forecasts in foreign currency are forecast in that currency and discounted using the applicable regional
discount rates (predominantly USD and GBP).
Sensitivity analysis
Increases in discount rates or changes in other key assumptions, such as operating conditions or financial performance,
may cause the recoverable amount to fall below carrying values.
Based on current economic conditions and CGU performance, there are no reasonably possible changes to key
assumptions used in the determination of CGU recoverable amounts that would result in an impairment to the Group.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 101
Notes to the consolidated financial statements:
Operating assets and liabilities
For the year ended 30 June 2021
NOTE 16 – PROVISIONS
Current
Employee entitlements
Other
Total current provisions
Other provisions
2021
Carrying amount at start of year
Charged/(credited) to profit or loss
Payments
Foreign currency translation
Carrying amount at end of year
2021
$m
51.2
48.8
100.0
Other
$m
0.6
37.1
–
(1.0)
36.7
2020
$m
42.7
11.2
53.9
Total
$m
11.2
48.2
(9.2)
(1.4)
48.8
Onerous
contracts
$m
Restructuring
$m
3.6
–
(1.4)
(0.4)
1.8
7.0
11.1
(7.8)
–
10.3
Other provisions include $35.9 million in relation to estimated repair costs for a winery and vineyards that were damaged
by wildfires in the Americas. Refer to note 4 for further details.
Onerous contract provisions are held for IT infrastructure and service contracts that have been identified as being
surplus to the Group’s needs. The restructuring provision comprises costs in relation to the Group’s rationalisation and
restructure program.
Accounting policies
Provisions are recognised for present obligations (legal, equitable or constructive) to make future payments (or other
transfer of value) to other entities due to past transactions or events. They are recognised only when it is probable the
liability will arise and when a reliable estimate can be made of the amount.
If the effect of time value of money is material, provisions are determined by discounting the expected future cash
flows at a pre-tax risk-free rate plus, where appropriate, the risks specific to the liability. Where discounting is used,
the increase in the provision due to the passage of time is recognised as a finance cost.
Employee entitlements
Liabilities for employees’ entitlements to wages and salaries, annual leave and other current employee entitlements
(that are expected to be paid within 12 months) are measured at amounts expected to be paid as at the reporting date.
Liabilities for other employee entitlements, which are not expected to be paid or settled within 12 months of reporting
date, are accrued in respect of all employees at the present value of future amounts expected to be paid.
Restructuring
Restructuring provisions are recognised at the point when a detailed plan for the restructure has been developed and
implementation has commenced. The cost of restructuring provided is the estimated future cash flows, discounted
at the appropriate rate which reflects the risks of the cash flow.
Termination benefits are payable when employment is terminated before the normal retirement date or whenever
an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits
when it is demonstrably committed to either terminating the employment of a current employee according to a detailed
formal plan without possibility of withdrawal or upon the provision of an offer to encourage voluntary redundancy.
Onerous contracts
Onerous contracts are measured at the lower of the expected cost of terminating the contract and the expected net
cost of continuing with the contract (discounted to present value if material).
102 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Notes to the consolidated financial statements:
Capital structure
For the year ended 30 June 2021
NOTE 17 – CAPITAL MANAGEMENT
The Group considers capital to be the combination of shareholders’ equity, reserves and net debt. The key objectives
of the Group’s approach to capital management include:
• Safeguard the Company’s ability to continue as a going concern;
• Maintaining a credit profile and the requisite financial metrics that secures access to funding with a spread of maturity
dates and sufficient undrawn committed facility capacity;
• Optimising over the long term, and to the extent practicable, the weighted average cost of capital to reduce the Group’s
cost of capital while maintaining financial flexibility; and
• To provide returns to shareholders and benefits to other stakeholders.
In order to optimise the Group’s capital structure and in line with the Group’s strategic objectives and operating plans,
the Company may:
• Alter the amount of dividends paid to shareholders;
• Return capital to shareholders;
• Issue new shares;
• Vary discretionary capital expenditure;
• Draw-down additional debt; or
• Sell assets to reduce debt.
Various financial ratios and internal targets are assessed and reported to the Board on a regular basis by management
to monitor and support the key objectives set out above. These ratios and targets include:
• An earnings to net interest expense ratio;
• A total net indebtedness to earnings before interest, tax, depreciation, amortisation and self-generating and
regenerating assets ratio; and
• Group debt maturity profile.
NOTE 18 – BORROWINGS
Total borrowings consist of:
Current
Non-current
Total borrowings
2021
$m
2020
$m
53.1
1,474.7
1,527.8
223.3
1,702.3
1,925.6
Details of major arrangements
US Private Placement Notes and Debt Facilities
US Private Placement (USPP) notes totalling US$325.0 million (unsecured) are outstanding, with maturities ranging from
December 2023 to June 2029. The carrying value of USPP notes at 30 June 2021 is $432.7 million (F20: $581.9 million).
During the year a US$200 million of syndicated debt facility originally maturing in October 2021 was cancelled. Syndicated
debt facilities now total US$350 million with US$120 million maturing November 2023 and US$230 million maturing in
November 2027. At 30 June 2021 syndicated facilities of US$350m are drawn against the November 2023 and 2027 tranches.
The carrying value of the syndicated debt facility at 30 June 2021 is $466.0 million (F20: $509.2 million).
The Group has in place several revolving bank debt facilities with maturities staggered through to June 2025.
As at 30 June 2021 there are no amounts drawn under the revolving bank debt facilities (F20: $100.0 million).
USPP notes bear interest at fixed and floating interest rates. In accordance with the Group’s risk management strategy,
the Group has entered into a combination of fixed to floating and floating to fixed interest rate swaps to obtain the desired
fixed/floating interest ratio, with interest rate collars also used to manage interest rate risk. Refer to note 24 for further details.
Financial guarantees
The Group has issued financial guarantees to other persons of $23.5 million (F20: $23.4 million) that could be called upon at
any time in the event of a breach of the Group’s financial obligations. No payments are expected to eventuate under these
financial guarantees as the Group expects to meet its respective obligations to the beneficiaries of these guarantees.
Lease liabilities
The Group enters into Lease arrangements that meet the capitalisation requirements under AASB 16 Leases. Current and
non-current lease liabilities are recognised for the present value of the lease payments due under the lease contracts
and are represented as borrowings.
At 30 June 2021, the Group recognised current lease liabilities of $54.8 million (30 June 2020: $56.1 million) and non-current
lease liabilities of $557.8 million (30 June 2020: $642.5 million). The Group’s lease arrangements have durations up to 25 years.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 103
Notes to the consolidated financial statements:
Capital structure
For the year ended 30 June 2021
NOTE 18 – BORROWINGS (CONTINUED)
Receivables purchasing agreement
The Group has entered into an uncommitted non-recourse receivable purchasing agreement to sell certain domestic and
international receivables, from time to time, to an unrelated entity in exchange for cash. As at 30 June 2021, nil receivables
had been derecognised under this arrangement (F20: $26.8 million).
Accounting policies
Borrowings are initially recorded at fair value of the consideration received, net of directly attributable costs.
After initial recognition, borrowings are measured at amortised cost, using the effective interest rate method.
Amortised cost is calculated by considering any issue costs, and any discount or premium on issuance.
Gains and losses are recognised in the statement of profit or loss and other comprehensive income if borrowings
are derecognised.
All balances translated to AUD
Net debt
Cash and cash equivalents
Loan receivable
Bank loans1
US Private Placement Notes (net of fair value hedge)
Lease liabilities
Other loan payable
Net debt
2020
$m
449.1
0.6
(602.6)
(581.9)
(698.6)
(0.8)
Total cash
flows from
activities
$m
Additions to
net debt
$m
Debt
revaluation
and FX
movements
$m
8.7
(0.1)
88.8
99.2
57.9
0.1
–
–
–
–
(18.7)
–
(18.7)
(9.7)
0.1
53.5
50.0
46.8
–
2021
$m
448.1
0.6
(460.4)
(432.7)
(612.6)
(0.7)
(1,434.2)
254.5
140.7
(1,057.7)
1. Loans are stated net of capitalised facility finance costs. At reporting date, the balance of bank loans is $466.0 million (F20: $609.2 million)
against capitalised facility finance costs of $5.6 million (F20: $6.6 million) to be amortised over the facility period.
NOTE 19 – CONTRIBUTED EQUITY
Issued and paid-up capital
721,848,176 (F20: 720,800,351) ordinary shares, fully paid
Own shares held
Contributed equity at the beginning of the period
Shares movements:
699,506 shares issued under the Dividend reinvestment plan (F20: 1,055,717)
348,319 shares issued for vested Long Term Incentive Plan and Share Cellar plan (F20: 644,149)
Net movement in own shares held
Contributed equity at the end of the period
The shares have no par value.
2021
$m
2020
$m
3,280.7
3,269.8
–
–
3,280.7
3,269.8
3,269.8
3,243.8
7.2
3.7
–
11.5
11.0
3.5
3,280.7
3,269.8
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. Ordinary shares entitle their holder to one vote, either
in person or by proxy, at a meeting of the Company. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax from the proceeds.
104 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 19 – CONTRIBUTED EQUITY (CONTINUED)
Purchase of shares for LTIP plans
The Group engages a third party to purchase shares in the Company to be used to satisfy share-based payment
obligations upon vesting under the Group’s Employee Equity Plans. Historically, such commitments were satisfied
by way of treasury share purchases (i.e. the Group acquiring shares on market directly). There are no treasury shares
held at 30 June 2021.
During the period, the Group purchased 0.3 million shares ($2.8 million) under the third-party arrangement
(F20: 0.3 million shares ($4.9 million)). A total of 0.1 million shares (F20: 0.2 million) purchased under the third-party
arrangement are available at 30 June 2021. Nil treasury shares (F20: Nil) are available at 30 June 2021.
NOTE 20 – COMMITMENTS
Details of the Group’s lease commitments are captured in Lease Liabilities disclosed within Borrowings (note 18) and the
impact of short-term and low value leases is captured in note 11.
Capital expenditure and other commitments
The following expenditure has been contracted but not provided for in the financial statements:
Capital expenditure
NOTE 21 – RESERVES
Cash flow hedge reserve
Share based payments reserve
Foreign currency translation reserve
Total reserves
2021
$m
2020
$m
37.2
45.5
2021
$m
(11.8)
(53.8)
(22.4)
(88.0)
2020
$m
(20.0)
(54.6)
86.6
12.0
Cash flow hedge reserve
This reserve records the effective portion of gains or losses from open cash flow hedges.
Share based payment reserve
This reserve records amounts offered to employees under Long-term Incentive Plan (LTIP), Restricted Equity Plan (REP),
deferred Short-term Incentive Plan (STIP) and Share Cellar plan.
Foreign currency translation reserve
This reserve holds exchange differences arising on translation of foreign subsidiaries, as described in note 1.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 105
Notes to the consolidated financial statements:
Capital structure
For the year ended 30 June 2021
NOTE 22 – EMPLOYEE EQUITY PLANS
STIP
(Restricted
shares)
MTIP
(Performance
rights)
LTIP
(Performance
rights)
REP
(Restricted
shares/deferred
share rights)
Share cellar
(Broad-based
employee share
plan)
Outstanding at the beginning of the year
192,587
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at the end of the year
Exercisable at the end of the year
–
(126,727)
–
65,860
–
309,352
673,068
(110,426)
(160,481)
711,513
–
1,121,224
931,679
–
(755,119)
1,297,784
–
126,496
359,041
(80,161)
(56,336)
349,040
–
208,569
181,531
(56,016)
(23,491)
310,593
–
The Group operates equity plans as outlined below:
STIP Restricted Equity
One-third of earned STIP is delivered in the form of deferred equity (Restricted Shares). The key terms of this award are:
• Subject to a mandatory restriction period and continued employment. Half of the award is restricted for one year
and the remaining half for two years from grant date;
• Holders of Restricted Shares are entitled to dividends and to exercise their voting rights during the restriction;
• Will generally be forfeited if the executive is dismissed for cause or resigns. Clawback mechanisms apply.
LTIP
Under the LTIP certain employees receive Performance Rights which entitle participants to receive the Company’s shares
at no cost subject to the achievement of performance conditions and continued employment. No dividends are payable
to participants prior to vesting. The performance conditions are:
• Relative Total Shareholder Return (TSR)
• Return on Capital Employed (ROCE) growth
• Will generally be forfeited if the executive is dismissed for cause or resigns. Clawback mechanisms apply.
The F19 – F21 performance rights are subject to TSR and ROCE targets weighted of 25% for TSR and 75% for ROCE over
a performance period of 3 years. The TSR and ROCE measures for the F19 plan were not met in F21 resulting in Nil vesting.
Mid-term Incentive Plan (MTIP)
The Group awarded an MTIP grant in F20 and F21. Under the MTIP certain employees receive Performance Rights which
entitle the participant to receive shares at no cost subject to the achievement of performance conditions and continuing
employment. The F20 and F21 plans have two equal vesting conditions: time-based (50%) and ROCE growth (50%). For the
time-based conditions half vest in 1-year (25%) and half in 2-years (25%). The ROCE measure for the F20 MTIP Plan was not
met in F21 resulting in Nil vesting.
Restricted Equity Plan (REP)
Under the REP certain employees receive a grant of restricted equity awards in the form of Restricted Shares. If Restricted
Shares cannot be awarded (e.g. due to country specific regulation) Deferred Share Rights are granted. The award is at
no cost to the employee and is subject to a restriction period. Restricted equity awards require continued employment
with the Group through the restriction period. Other terms are similar to the STIP terms above.
Restricted equity awards may be granted to compensate employees for foregoing equity compensation in their previous
organisation as a sign-on award and/or as a retention incentive.
Share Cellar (broad-based Employee Share Plan)
Share Cellar is the Group’s broad-based Employee Share Plan and plan participation is offered annually. The plan was
first launched early in 2015. Participation is voluntary and employees in select countries are eligible to join the Plan.
Share Cellar operates as a matching plan whereby employees contribute funds to the Plan from their after-tax pay
and shares are acquired by the Group on their behalf. In the plans operating from 2015 to 2018, for every two purchased
shares that a participant holds at the vesting date (approximately two years) the Group delivers one matched share,
subject to continued employment. For employees enrolling in the 2020 and 2021 plans, the Group will deliver one matched
share for every purchased share held at the plan vesting date, subject to continued employment.
Participants are entitled to dividends and to exercise voting rights attached to the shares purchased under the plan,
and matched shares once they have been allocated.
106 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 22 – EMPLOYEE EQUITY PLANS (CONTINUED)
Accounting policies
Employee equity plans are accounted for as share based payments, whereby employees render services in exchange
for the awards. The fair value of the shares and performance rights that are expected to vest is progressively recognised
as an employee benefits expense over the relevant vesting period with a corresponding increase in equity.
The fair value of shares granted is determined by reference to observed market values. The fair value of the TSR component
of performance rights is independently determined at grant date by an external valuer using a Monte-Carlo simulation.
For the non-market components (ROCE), the fair value is independently determined based on the share price less the
present value of dividends.
Non-market performance conditions do not impact the value of shares and performance rights, but rather the
estimate of the number of shares to vest.
At each reporting date the Company revises the estimate of the number of shares and the non-market component
of performance rights that are expected to vest, and the employee benefits expense recognised each period
incorporates this change in estimate.
An expense is recognised for the TSR component of performance rights whether or not the TSR hurdle is met.
No expense is recognised if these rights do not vest due to cessation of employment. No expense is recognised
for shares and non-market components of performance rights that do not ultimately vest.
Active share-based payment plans:
Long-term Incentive Plans
The below table outlines the F21 and F20 LTIP plans which have a vesting date post 30 June 2021:
Grant date
Grant date share price
Expected share price volatility (%)
Expected dividend yield (%)
Risk-free interest rate (%)
Fair value estimate at grant date – TSR
Fair value estimate at grant date – ROCE
Mid-term Incentive Plans
The below table outlines the F21 and F20 MTIP plans which have a vesting date post 30 June 2021:
Grant date
Grant date share price
Expected dividend yield (%)
Fair value estimate at grant date – ROCE
Fair value estimate time-based – Vesting F21: 2021 (F20: 2020)
Fair value estimate time-based – Vesting F21: 2022 (F20: 2021)
Restricted Equity Plans
Grant date
F19
12-Nov-18
F20
11-Nov-19
F21
23-Nov-20
F21 Plan
23-Nov-20
F20 Plan
11-Nov-19
$10.01
41.0
2.1
0.10
$4.78
$9.48
$18.14
29.0
2.4
0.87
$11.77
$17.03
F21 Plan
23-Nov-20
F20 Plan
11-Nov-19
$10.01
2.1
$9.68
$9.85
$9.65
$18.14
2.4
$17.44
$17.79
$17.37
Grant date share price
$15.56
$18.14
$10.01
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 107
Notes to the consolidated financial statements:
Taxation
For the year ended 30 June 2021
NOTE 23 – INCOME TAX
The major components of income tax expense are:
Statement of profit or loss
Current income tax expense
Deferred income tax expense
Total tax expense
Deferred income tax expense included in the income tax expense comprises:
Decrease in deferred tax assets
(Decrease)/increase in deferred tax liabilities
Deferred income tax
Tax reconciliation
The amount of income tax expense as shown in the consolidated statement of profit
or loss and other comprehensive income differs from the prima facie income tax
expense attributable to earnings. The differences are reconciled as follows:
Profit before tax excluding material items
Material items before tax
Profit before tax
Prima facie income tax expense attributable to profit from operations
calculated at the rate of 30% (F20: 30%)
Tax effect of:
Non-taxable income and profits, net of non-deductible expenditure
Other deductible items
Change in tax rate
Foreign tax rate differential
Other
Under/(over) provisions in previous years
Total tax expense
Income tax expense on operations
Income tax benefit attributable to material items
Income tax expense
Deferred income tax relates to the following:
Deferred tax assets
The balance comprises temporary differences attributable to:
Inventory
Property, plant and equipment (including vines)
Right-of-use assets and lease liabilities
Accruals
Provisions
Deferred interest
Foreign exchange
Tax losses
Other
Total deferred tax assets
1.
Reported results restated for changes to accounting policies. Refer to note 32.
108 – TREASURY WINE ESTATES ANNUAL REPORT 2021
2021
$m
Restated1
2020
$m
109.1
(1.4)
107.7
0.1
(1.5)
(1.4)
99.3
4.0
103.3
5.6
(1.6)
4.0
446.2
(88.5)
357.7
385.3
(36.6)
348.7
107.3
104.6
(3.0)
(0.3)
6.2
(2.0)
3.1
(3.6)
107.7
130.1
(22.4)
107.7
–
11.0
38.8
22.3
27.3
–
–
67.9
16.4
183.7
2.9
(5.8)
(0.7)
(4.6)
5.7
1.2
103.3
113.7
(10.4)
103.3
15.1
13.9
42.3
17.6
18.3
4.5
8.8
61.6
11.7
193.8
NOTE 23 – INCOME TAX (CONTINUED)
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Inventory
Property, plant and equipment (including vines)
Intangibles
Other
Total deferred tax liabilities
Movements in deferred income tax relate to the following:
Movement in deferred tax assets:
Opening balance
(Charged) to profit or loss
Recognised directly in Equity
Balance sheet reclassification
Foreign currency translation
Other
Closing balance
Movement in deferred tax liabilities:
Opening balance
(Credited)/charged to profit or loss
Recognised directly in Equity
Business acquisitions
Transfer (to)/from Assets Held for Sale
Foreign currency translation
Balance sheet reclassification
Reclassification
Closing balance
Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period
and not recognised in net profit or loss but directly credited to equity
2021
$m
Restated1
2020
$m
23.6
58.8
224.0
3.2
309.6
193.8
(0.1)
(2.7)
(1.8)
(11.9)
6.4
183.7
334.3
(1.5)
–
–
(5.5)
(15.9)
(1.8)
–
14.4
74.9
241.3
3.7
334.3
191.8
(5.6)
4.7
(1.8)
2.6
2.1
193.8
334.7
(1.6)
0.8
1.2
(4.4)
3.1
(1.8)
2.3
309.6
334.3
(2.7)
3.9
Unrecognised tax assets
There are potential future income tax benefits relating to accumulated losses in non-Australian group companies,
which have not been brought to account. These possible benefits amount to $39.2 million (F20: $38.1 million).
The Group has carry forward capital tax losses in Australia and the UK respectively. These losses may be used to offset
any future capital gains derived by activities in these countries. The Group will assess the conditions for deductibility
imposed by the tax laws of Australia and the UK prior to any utilisation of the capital losses.
Ongoing tax audits
The Group is subject to ongoing tax audits by taxation authorities in several jurisdictions covering a variety of taxes.
The Group fully cooperates with these enquiries as and when they arise.
Franking credits
The Australian Tax Consolidation Group has $119.7 million (F20: $86.7 million) of franking credits available for subsequent
reporting periods.
UK corporation tax rate
On 3 March 2021, the UK Government announced that from 1 April 2023, the Corporation Tax main rate for non-ring fenced
profits will be increased to 25% applying to profits over £250,000. The change was introduced in Finance Bill 2021 which was
published on 11 March 2021. Following the substantive enactment of Finance Bill 2021, the Group remeasured the deferred tax
assets and liabilities of its UK operations using the new tax rate and recognised a one-off charge of $6.2 million.
1.
Reported results restated for changes to accounting policies. Refer to note 32.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 109
Notes to the consolidated financial statements:
Taxation
For the year ended 30 June 2021
NOTE 23 – INCOME TAX (CONTINUED)
Key estimate and judgement:
Taxation
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement
is required in determining the worldwide provision for income taxes. There are many transactions and calculations
undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Where the final
tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the
current and deferred tax provisions in the period in which such determination is made.
Accounting policies
Current taxes
Current tax assets and liabilities are measured at the amount expected to be recovered from, or paid to, taxation
authorities at the tax rates and tax laws enacted or substantively enacted by the reporting date.
Deferred taxes
Deferred income tax liabilities are recognised for all taxable temporary differences. Deferred income tax assets
are recognised for all deductible temporary differences, carried forward unused tax assets and unused tax losses,
to the extent it is probable that they will be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent
that it will become probable that future taxable profit will allow the deferred tax asset to be recovered.
The carrying amount of deferred income tax assets is reviewed at balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be available to utilise them.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively
enacted at the balance sheet date.
Deferred income tax is provided on temporary differences at balance sheet date between accounting carrying
amounts and the tax bases of assets and liabilities, other than for:
• The initial recognition of an asset or liability in a transaction that is not a business combination and at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss or on the recognition of goodwill.
• Foreign taxes which may arise in the event of retained profits of foreign controlled entities being remitted to Australia
as there is no present intention to make any such remittances.
Deferred tax assets and deferred tax liabilities associated with indefinite life intangibles such as brand names are
measured based on the tax consequences that would follow from the use and sale of that asset.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Offsetting deferred tax balances
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and
the same taxation authority.
110 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Notes to the consolidated financial statements:
Risk
For the year ended 30 June 2021
NOTE 24 – FINANCIAL RISK MANAGEMENT
Financial risk management framework
The Group’s financial risk management policies (‘Group Treasury Policies’) cover risk tolerance, internal controls
(including segregation of duties), delegated authority levels, management of foreign currency, interest rate and
counterparty credit exposures, and the reporting of exposures. These policies are reviewed at least annually
and approved by the Board of Directors.
The centralised Group Treasury function has been delegated operational responsibility for the identification and
management of financial risks.
The Group holds financial instruments from financing (principally borrowings), transactions (trade receivables and
payables) and risk management (derivatives) which result in exposure to the following financial risks, covered by the
Group Treasury Policies:
• Liquidity risk;
• Interest rate risk;
• Foreign exchange risk; and
• Counterparty credit risk.
The following table outlines how these risks impact Group financial assets and liabilities:
Net borrowings
Receivables
Other financial assets
Payables
Note
18
9
9
9
Derivative financial assets and liabilities
25, 32
Liquidity
risk
(A)
Interest
rate risk
(B)
Foreign
exchange risk
(C)
Credit
risk
(D)
X
X
X
X
X
X
X
X
X
X
X
X
X
X
(a) Liquidity risk
Nature of the risk
The Group is exposed to liquidity risk primarily from its core operating activities. The Group’s focus is to ensure it is able
to meet financial obligations as and when they fall due.
Risk management
The Group ensures the maintenance, at all times, of an appropriate minimum level of liquidity, comprising committed,
unutilised debt facilities and cash resources. To facilitate this, the Group monitors forecast and actual cash flows,
performs sensitivity analysis as well as monitoring the availability and cost of debt and equity funding.
The Group’s objective is to balance continuity of funding and flexibility by maintaining an appropriately structured debt
maturity profile with a mix of bank and capital (bond) market debt, whilst also monitoring compliance with the Group’s
key financial covenants and undertakings.
At reporting date, the standby arrangements and unused credit facilities are as follows:
Committed facilities
Available facilities
Amounts utilised
Amount unutilised
The Group is in compliance with all undertakings under its various financing arrangements.
2021
$m
1,692.7
(898.7)
794.0
2020
$m
2,111.3
(1,191.1)
920.2
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 111
Notes to the consolidated financial statements:
Risk
For the year ended 30 June 2021
NOTE 24 – FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Liquidity risk (continued)
Level of exposure at balance date
The following tables analyse the maturities of the Group’s contractual undiscounted cash flows arising from its material
financial liabilities and derivative financial instruments.
6 months
or less
$m
6 months
to 1 year
$m
1 to 2
years
$m
2 to 5
years
$m
Over
5 years
$m
Contractual
total
$m
Carrying
amount
$m
Maturing in:
2021
Non-derivative financial liabilities
Bank loans1
Lease liabilities
Other loans
US Private Placement Notes
Trade Payables
Other Payables
Derivative financial liabilities
Foreign exchange contracts
Interest rate and cross currency swaps
3.7
38.1
–
9.9
322.1
381.5
0.1
6.5
3.8
43.3
–
9.3
–
–
0.1
7.3
8.4
84.3
0.6
18.5
–
–
0.4
13.5
Total financial liabilities
761.9
63.8
125.7
2020
Non-derivative financial liabilities
Bank loans1
Lease liabilities
Other loans
US Private Placement Notes
Trade payables
Other Payables
Derivative financial liabilities
Foreign exchange contracts
Interest rate and cross currency swaps
Total financial liabilities
105.5
47.0
0.2
119.9
300.4
381.7
0.3
7.1
962.1
4.3
45.5
–
9.7
–
–
0.8
7.3
67.6
8.4
88.8
0.6
19.5
–
–
0.8
14.9
184.8
234.6
–
319.6
413.1
–
269.0
233.2
–
–
–
5.6
520.3
813.4
0.6
539.9
322.1
381.5
460.4
612.6
0.6
432.7
322.1
381.5
0.6
64.7
0.6
25.0
971.5
2,643.1
2,235.5
353.7
512.7
–
314.6
–
–
–
–
669.5
943.6
0.8
692.0
300.4
381.7
602.6
698.6
0.8
581.9
300.4
381.7
2.1
38.2
2.1
24.0
–
–
–
31.8
720.2
197.6
249.6
–
228.3
–
–
0.2
8.9
133.0
684.6
1,181.0
3,028.3
2,592.1
1. Loans are stated net of capitalised facility finance costs. At reporting date, the balance of bank loans is $466.0 million (F20: 609.2 million)
against capitalised facility finance costs of $5.6 million (F20: $6.6 million) to be amortised over the facility period.
(b) Interest rate risk
Nature of the risk
The Group is exposed to interest rate risk principally from floating rate bank borrowings. Other sources of interest rate risk
include receivable purchasing agreements, interest-bearing investments, creditors’ accounts offering a discount and
debtors’ accounts on which discounts are offered.
Risk management
We manage interest rate risk by ensuring that the sensitivity of forecast future earnings to changes in interest rates
is within acceptable limits. This involves longer term forecasting of both expected earnings and expected borrowing
to determine the tolerable exposure.
A combination of interest rate swaps have been exchanged to obtain the desired ratio of fixed and floating interest rates.
At 30 June 2021, interest rate swap contracts were in use to exchange fixed interest rates to floating rates on $332.9 million
(US$250.0 million) of US Private Placement notes. A combination of floating to fixed interest rate swaps and fixed interest
rate caps have been used to exchange the floating rates to fixed on all US Private Placement notes (US$325 million).
The swaps mature in December 2023, June 2027 and June 2029. Cross currency interest rate swaps are used to exchange
floating USD interest on a portion of the USD syndicated debt facility of US$120 million into AUD fixed rate of $166.6 million
with maturities in November 2023. Please refer note 24(a) for the profile and timing of cash flows over the next five years.
112 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 24 – FINANCIAL RISK MANAGEMENT (CONTINUED)
(b) Interest rate risk (continued)
The Group’s exposure to variable interest rate risk results from the following financial instruments at balance sheet date:
Financial assets
Cash and cash equivalents
Total assets
Financial liabilities
US Private Placement Notes1
Bank loans1
Total liabilities
1. Net of hedged amounts.
2021
$m
448.1
448.1
–
199.7
199.7
2020
$m
449.1
449.1
43.6
318.2
361.8
Sensitivity analysis
The table below shows the impact by currency denomination if the Group’s weighted average floating interest rates
change from the year-end rates of 0.20% (F20: 0.37%) with all other variables held constant.
Currency
USD
AUD
GBP
Sensitivity
2021
2020
+ / – 25bp
+ / – 25bp
+ / – 25bp
+ / – 25bp
+ / – 25bp
+ / – 25bp
2021
-$m
0.1
(0.6)
(0.1)
Pre-tax impact on profit
+$m
(0.2)
0.2
0.1
2020
-$m
0.2
(0.2)
(0.1)
+$m
(0.1)
0.6
0.1
The movements in profit on a consolidated level are primarily a result of interest costs from borrowings. There would have
been no significant impact on equity.
(c) Foreign exchange risk
Nature of the risk
The Group is exposed to foreign exchange risk through:
• Transaction exposures including sales of wine into export markets and the purchase of production inputs, denominated
in foreign currencies other than the respective functional currency of the specific Group entity;
• Exposures arising from borrowings denominated in foreign currencies; and
• Translation exposures including earnings of foreign subsidiaries and revaluation of monetary assets and liabilities,
including borrowings.
The currencies in which these transactions are primarily denominated are the Australian Dollar (AUD), United States Dollar
(USD) and Great British Pound (GBP). Other currencies used include the Canadian Dollar, Euro, New Zealand Dollar,
Singapore Dollar, Swedish Krona, Norwegian Krone, Chinese Renminbi and South African Rand.
Risk management
The focus of the Group’s foreign exchange risk management activities is on the transactional exposures arising from the
sourcing and sale of wine.
A proportion of expenses are hedged over time up to a period of three years. The nominal amount and average hedge
rate of the instruments in place at 30 June 2021 are disclosed in the following table.
In determining the amount of hedging required, the Group also considers the ‘natural hedges’ arising from the underlying
net cash flows in the relevant currency, comprising operating, investing and financing cash flows.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 113
Notes to the consolidated financial statements:
Risk
For the year ended 30 June 2021
NOTE 24 – FINANCIAL RISK MANAGEMENT (CONTINUED)
(c) Foreign exchange risk (continued)
Details of the Group’s open hedges at balance sheet date are shown below.
Open foreign currency hedges at 30 June 2021
Currency
AUD/USD
AUD/GBP
Hedge type
Forwards
Options
Total
Forwards
Options
Total
Hedge value
(notional AUD)
$m
Average
hedge rate
20.8
210.2
231.0
10.5
82.6
93.1
0.7566
0.7614
0.5371
0.5707
Level of exposure at balance date
At the reporting date, the Group’s financial assets and liabilities were denominated across the following currencies:
All balances translated to AUD
2021
Net debt
Cash and cash equivalents
Loan receivable
Bank loans2
US Private Placement Notes (net of fair value hedge)
Lease liabilities
Other loan payable
Net debt
Other financial assets/(liabilities)
Trade receivables (net of allowance for expected
credit loss)
Other receivables
Trade and other payables
Net other assets/(liabilities)
2020
Net debt
Cash and cash equivalents
Loan receivable
Bank loans2
US Private Placement Notes (net of fair value hedge)
Lease liabilities
Other loan payable
Net debt
Other financial assets/(liabilities)
Trade receivables (net of allowance
for expected credit loss)
Other receivables
Trade and other payables
Net other assets/(liabilities)
AUD
$m
USD
$m
GBP
$m
Other
$m
Total
$m
220.4
0.6
1.7
–
(97.9)
(0.7)
124.1
202.7
4.2
(320.9)
(114.0)
160.4
0.6
(98.2)
–
(105.6)
(0.8)
(43.6)
226.0
25.1
(323.3)
(72.2)
151.6
–
(462.1)
(432.7)
(492.4)
–
(1,235.6)
128.7
59.7
(244.5)
(56.1)
186.1
–
(504.4)
(581.9)
(568.2)
–
(1,468.4)
110.8
18.8
(240.0)
(110.4)
18.7
–
–
–
(2.1)
–
16.6
95.5
–
(55.7)
39.8
57.4
–
–
–
(20.2)
–
37.2
50.7
3.5
(82.5)
(28.3)
58.4
44.2
–
–
–
(0.4)
–
58.0
74.2
0.5
(61.2)
13.5
–
–
–
(24.4)
–
19.8
57.6
0.8
(57.6)
0.8
448.1
0.6
(460.4)
(432.7)
(612.6)
(0.7)
(1,057.7)
477.6
67.4
(703.6)
(158.6)
449.1
0.6
(602.6)
(581.9)
(698.6)
(0.8)
(1,434.2)
468.6
45.2
(682.1)
(168.3)
2. Includes capitalised borrowing costs of $5.7 million (F20: $6.6 million).
114 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 24 – FINANCIAL RISK MANAGEMENT (CONTINUED)
(c) Foreign Exchange risk (continued)
Sensitivity analysis
The following table illustrates the impact of potential foreign exchange movements on profit before tax and the statement
of financial position at 30 June:
Currency
United States Dollar
Great Britain Pound
Euro
Canadian Dollar
New Zealand Dollar
Sensitivity
assumption3
2021
2020
9.0%
7.4%
7.2%
6.7%
4.9%
10.9%
9.8%
9.4%
8.6%
5.8%
Pre-tax impact on profit
$m
Impact on equity
$m
2021
-
0.2
(0.1)
(0.2)
1.7
–
+
(0.2)
0.1
0.2
(1.5)
–
2020
-
1.1
0.5
(1.1)
1.6
0.1
+
(0.9)
(0.4)
0.9
(1.4)
(0.1)
+
(61.0)
(17.0)
(3.7)
1.5
(8.1)
2021
-
82.2
21.1
4.5
(1.7)
9.0
2020
-
103.1
29.1
8.9
(1.5)
9.1
+
(78.0)
(22.0)
(7.3)
1.3
(8.1)
3. Australian dollar versus individual currencies. Implied one-year currency volatility at reporting date (Source: Bloomberg).
(d) Credit risk
Nature of the risk
Counterparty credit risk arises primarily from the following assets:
• Cash and cash equivalents;
• Trade and other receivables; and
• Derivative instruments.
Risk management
The Group’s counterparty credit risk management philosophy is to limit the Group’s loss from default by any one
counterparty by dealing only with financial institution counterparties of good credit standing, setting maximum exposure
limits for each counterparty, and taking a conservative approach to the calculation of counterparty credit limit usage.
Where available, credit opinions on counterparties from two credit rating agencies are used to determine credit limits.
The Group assesses the credit quality of individual customers prior to offering credit terms and continues to monitor
on a regular basis. Each customer is assigned a risk profile based upon the measurable risk indicators for dishonoured
payments, adverse information and average days late along with the securities and guarantees held. All prospective
accounts are required to complete a credit application and generally a director’s guarantee is required with minimal
exceptions. Failure to provide a director’s guarantee results in either no credit or a limited level of credit offered. Credit
terms may be reduced or extended for individual customers based on risk.
Past due accounts are subject to a number of collection activities which range from telephone contact, suspension
of orders through to legal action. Past due accounts are reviewed monthly with specific focus on accounts that are
greater than 90 days overdue. Where debt cannot be recovered, it is escalated from the credit representative to the
credit manager to initiate recovery action.
For derivatives, the Group transacts under an International Swaps and Derivatives Association (ISDA) master netting
agreement. If a credit event such as a default occurs, all outstanding transactions under an ISDA agreement are
terminated, the termination value is assessed and only a single net amount is payable in settlement of all transactions.
COVID-19 considerations
In F21 the Group, as part of its normal monitoring of the credit quality of trade receivables, continued more frequent
telephone contact and engagement with customers to understand customer trading and credit circumstances, and
supporting them through any short-term challenges identified. The Group also increased the frequency of monitoring
customer credit risk assessments across the entire customer portfolio. No customers were identified to be in financial
distress and no bad debts have been written off in F21 as a result of COVID-19.
Level of exposure at balance date
The maximum counterparty credit risk exposure at 30 June 2021 in respect of derivative financial instruments was
$4.5 million (F20: $13.9 million) and in respect of cash and cash equivalents was $125.0 million (F20: $109.6 million).
The Group’s authorised counterparties are restricted to banks and financial institutions whose long-term credit rating
is at or above a Standard and Poors rating of A- (or Moody’s equivalent rating of A3), with any exceptions requiring
approval from the Board. Commercial paper investments are restricted to counterparties whose short-term credit
rating is at or above a Standard and Poor’s rating of A-1 (or Moody’s equivalent rating of P-2). The magnitude of credit
risk in relation to receivables is generally the carrying amount, net of any allowance for expected credit loss.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 115
Notes to the consolidated financial statements:
Risk
For the year ended 30 June 2021
NOTE 24 – FINANCIAL RISK MANAGEMENT (CONTINUED)
(d) Credit risk (continued)
The ageing of the consolidated Group trade receivables (net of provisions) is outlined below:
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61 days+
Total
2021
$m
459.5
10.9
1.8
5.4
477.6
2020
$m
396.4
20.9
18.2
33.1
468.6
Trade receivables have been aged according to their due date. Terms may be extended on a temporary basis with the
approval of management. The past due receivables shown above relate to customers who have a good debt history and
are considered recoverable. There is no collateral held as security against the receivables above and there are no other
receivables past due.
NOTE 25 – DERIVATIVE FINANCIAL INSTRUMENTS
At reporting date, there were $754.2 million (Australian dollar equivalent) net face value of outstanding foreign exchange
contracts at contract rates (F20: $506.5 million), interest rate swaps of $665.7 million (F20: $654.7 million) and cross currency
interest rate swaps of $159.8 million (F20: $174.6 million) and interest rate collars of $146.5 million (F20: $218.2 million).
These instruments are regarded as Level 2 under AASB’s Fair Value measurement hierarchy.
NOTE 26 – FAIR VALUES
The fair values of cash and cash equivalents, financial assets and most financial liabilities approximate their carrying
value. The fair value of the US Private Placement Notes is $492.8 million (F20: $679.3 million) and the fair value of the
syndicated debt facility is $500.0 million (F20: $530.3 million). There have been no reclassifications of financial assets
from fair value to cost, or from cost or amortised cost to fair value during the year.
The fair values of derivative financial instruments are based upon market prices, or models using inputs observed from
the market, where markets exist or have been determined by discounting the expected future cash flows by the current
interest rate for financial assets and financial liabilities with similar risk profiles (a Level 2 valuation).
The valuation of derivative financial assets and liabilities reflects the estimated amounts which the Group would be
required to pay or receive to terminate the contracts (net of transaction costs) or replace the contracts at their current
market rates at reporting date. This is based on internal valuations using standard valuation techniques.
As the purpose of these derivative financial instruments is to hedge the Group’s underlying assets and liabilities
denominated in foreign currencies and to hedge against risk of interest rate fluctuations, it is unlikely in the absence
of abnormal circumstances that these contracts would be terminated prior to maturity.
For all other recognised financial assets and financial liabilities, based on the facts and circumstances existing at reporting
date and the nature of the Group’s financial assets and financial liabilities including hedge positions, the Group has
no reason to believe that the financial assets could not be exchanged, or the financial liabilities could not be settled,
in an arm’s length transaction at an amount approximating its carrying amount.
116 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Notes to the consolidated financial statements:
Group composition
For the year ended 30 June 2021
NOTE 27 – SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Entity name
Equity holding of 100% (F20: 100%)
Aldershot Nominees Pty. Ltd.*
B Seppelt & Sons Limited*
Beringer Blass Distribution S.R.L.
Beringer Blass Italia S.R.L.
Beringer Blass Wine Estates Chile Limitada
Beringer Blass Wine Estates Limited
Beringer Blass Wines Pty. Ltd.*
Bilyara Vineyards Pty. Ltd.*
Cellarmaster Wines (UK) Limited
Cellarmaster Wines Holdings (UK) Limited
Cuppa Cup Vineyards Pty. Ltd.
Devil’s Lair Pty. Ltd.
Ewines Pty. Ltd.
FBL Holdings Limited
Il Cavaliere del Castello di Gabbiano S.r.l.
Interbev Pty. Ltd.*
Leo Buring Pty. Ltd.
Lindeman (Holdings) Limited*
Lindemans Wines Pty. Ltd.
Mag Wines Pty. Ltd
Majorca Pty. Ltd.*
Mildara Holdings Pty. Ltd.*
North America Packaging (Pacific Rim) Corporation
Penfolds Wines Australia Pty Ltd (formerly known as Treasury Logistics Pty Ltd)*
Penfolds Wines International Limited (formerly known as Coldstream Australasia Limited)*
Penfolds Wines Pty Ltd
Piat Pere et Fils B.V.
Premium Land, Inc.
Robertsons Well Pty. Ltd.
Robertsons Well Unit Trust
Rosemount Estates Pty. Ltd.
Rothbury Wines Pty. Ltd.*
SCW905 Limited*
Seaview Wynn Pty. Ltd.*
Société Civile d’Exploitation Agricole Cambon La Pelouse
Southcorp Australia Pty. Ltd. *
Southcorp Brands Pty. Ltd.*
Southcorp International Investments Pty. Ltd.*
Southcorp Limited*
Southcorp NZ Pty. Ltd.*
Southcorp Whitegoods Pty. Ltd.
Southcorp Wines Asia Pty. Ltd.
Southcorp Wines Pty. Ltd.*
Southcorp XUK Limited
T’Gallant Winemakers Pty. Ltd.
The Rothbury Estate Pty. Ltd.*
Tolley Scott & Tolley Limited*
Treasury Americas Inc
Country of incorporation
Australia
Australia
Italy
Italy
Chile
UK
Australia
Australia
UK
UK
Australia
Australia
Australia
UK
Italy
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
Australia
Australia
Australia
Netherlands
USA
Australia
Australia
Australia
Australia
Australia
Australia
France
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
UK
Australia
Australia
Australia
USA
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 117
Notes to the consolidated financial statements:
Group composition
For the year ended 30 June 2021
NOTE 27 – SUBSIDIARIES (CONTINUED)
Entity name
Country of incorporation
Treasury Chateau & Estates LLC
Treasury Wine Estates (China) Holding Co Pty Ltd*
Treasury Wine Estates (Matua) Limited
Treasury Wine Estates (NZ) Holding Co Pty Ltd*
Treasury Wine Estates (Shanghai) Trading Co. Ltd.
Treasury Wine Estates (UK) Holding Co Pty Ltd*
Treasury Wine Estates Americas Company
Treasury Wine Estates Asia (SEA) Pte Ltd
Treasury Wine Estates Asia Pty. Ltd.
Treasury Wine Estates Australia Limited*
Treasury Wine Estates Barossa Vineyards Pty. Ltd.
Treasury Wine Estates Canada, Inc.
Treasury Wine Estates Denmark ApS
Treasury Wine Estates EMEA Limited
Treasury Wine Estates France S.A.R.L.
Treasury Wine Estates HK Limited
Treasury Wine Estates Holdings Inc.
Treasury Wine Estates Japan KK
Treasury Wine Estates Netherlands B.V
Treasury Wine Estates Norway AS
Treasury Wine Estates Sweden AB
Treasury Wine Estates UK Brands Limited
Treasury Wine Estates Vintners Limited*
TWE Finance (Aust) Limited*
TWE Finance (UK) Limited
TWE Insurance Company Pte. Ltd.
TWE Lima Pty Ltd*
TWE Share Plans Pty Ltd
TWE US Finance Co.
TWE USA Partnership
Wolf Blass Wines Pty. Ltd.*
Woodley Wines Pty. Ltd.
Wynn Winegrowers Pty. Ltd.
Wynns Coonawarra Estate Pty. Ltd
USA
Australia
New Zealand
Australia
China
Australia
USA
Singapore
Australia
Australia
Australia
Canada
Denmark
UK
France
Hong Kong SAR, China
USA
Japan
Netherlands
Norway
Sweden
UK
Australia
Australia
UK
Singapore
Australia
Australia
USA
USA
Australia
Australia
Australia
Australia
* Entity is a member of the Closed Group under the Deed of Cross Guarantee (refer to note 29) and relieved from the requirement to prepare
audited financial statements by ASIC Corporations (Wholly owned Companies) Instrument 2016/785.
Entity name
Country of incorporation
2021
2020
% of holding
Equity holding of less than 100%
Fiddlesticks LLC
Graymoor Estate Joint Venture
Graymoor Estate Pty. Ltd.
Graymoor Estate Unit Trust
North Para Environment Control Pty. Ltd.
USA
Australia
Australia
Australia
Australia
50.0
48.8
48.8
48.8
69.9
50.0
48.8
48.8
48.8
69.9
118 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 28 – PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders’ equity
Issued capital
Share based payments reserve
Retained earnings
Total equity
Profit for the year
Total comprehensive income
2021
$m
2020
$m
846.4
8,953.3
5,453.0
5,453.0
3,500.3
841.4
8,948.2
5,293.7
5,293.7
3,654.5
3,280.7
3,269.8
(53.7)
273.3
(54.6)
439.3
3,500.3
3,654.5
–
–
350.0
350.0
Current liabilities comprise balances with other entities within the Group. These balances will not be called within the next
12 months.
(b) Financial guarantees
Refer note 18 for financial guarantees to banks, financiers and other persons.
(c) Tax consolidation legislation
The Company formed a consolidated group for income tax purposes with each of its Australian resident subsidiaries on
21 May 2011. The Company and the controlled entities in the tax consolidation group continue to account for current and
deferred tax amounts separately. These tax amounts are measured on a ‘group allocation’ approach, under which the
current and deferred tax amounts for the tax-consolidated group are allocated among each reporting entity in the Group.
(d) Capital commitments
There are no capital commitments for the Company (F20: nil).
NOTE 29 – DEED OF CROSS GUARANTEE
Under the terms of ASIC Corporations (Wholly owned Companies) Instrument 2016/785, certain wholly owned controlled
entities have been granted relief from the requirement to prepare audited financial reports. It is a condition of the class
order that the Company and each of the relevant subsidiaries enter into a Deed of Cross Guarantee whereby each
company guarantees the debts of the companies party to the Deed. The member companies of the Deed of Cross
Guarantee are regarded as the ‘Closed Group’ and identified in note 27.
A summarised consolidated statement of profit or loss and other comprehensive income, retained earnings reconciliation
and a consolidated statement of financial position, comprising the Company and those controlled entities which are
a party to the Deed of Cross Guarantee, after eliminating all transactions between parties to the Deed, at 30 June 2021
are set out below.
Extract of the statement of profit or loss and other comprehensive income
Profit before tax
Income tax expense
Net profit after tax
Retained earnings at beginning of the year
External dividends
Retained earnings at end of the year
1.
Reported results restated for changes to accounting policies. Refer to note 32.
2021
$m
Restated1
2020
$m
365.8
(100.2)
265.6
72.9
(165.9)
172.6
255.3
(75.6)
179.7
181.1
(287.9)
72.9
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 119
Notes to the consolidated financial statements:
Group composition
For the year ended 30 June 2021
NOTE 29 – DEED OF CROSS GUARANTEE (CONTINUED)
Statement of financial position
Current assets
Cash and cash equivalents
Receivables
Inventories
Investments
Assets held for sale
Other current assets
Total current assets
Non-current assets
Inventories
Investments
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2021
$m
Restated1
2020
$m
215.9
250.1
432.3
1.9
8.1
8.3
267.3
245.3
495.6
1.9
–
6.6
916.6
1,016.7
650.8
2,257.5
629.9
86.9
547.0
44.8
1.9
4,218.8
5,135.4
326.4
655.1
22.7
46.4
5.4
1,056.0
547.5
121.7
21.2
690.4
1,746.4
3,389.0
528.9
2,257.5
588.7
96.2
549.7
43.9
2.7
4,067.6
5,084.3
306.6
643.9
23.9
38.5
6.7
1,019.6
638.7
122.6
11.6
772.9
1,792.5
3,291.8
3,281.3
3,269.8
(64.9)
172.6
(50.9)
72.9
3,389.0
3,291.8
Current borrowings include balances with other entities within the Group. These balances will not be called within the
next 12 months.
1.
Reported results restated for changes to accounting policies. Refer to note 32.
120 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Notes to the consolidated financial statements:
Other
For the year ended 30 June 2021
NOTE 30 – RELATED PARTY DISCLOSURES
Ownership interests in related parties
All material ownership interests in related parties are disclosed in note 27 to the financial statements.
Parent entity
The ultimate parent entity is Treasury Wine Estates Limited, which is domiciled and incorporated in Australia.
Transactions with entities in the wholly-owned Group
Transactions between companies within the Group during the current and prior year included:
• Purchases and sales of goods and services; and
• Provision of accounting and administrative assistance.
Transactions with controlled entities are made on normal commercial terms and conditions.
Transactions with other related parties
The Group entered into transactions which are insignificant in amount with executives, non-executive Directors and their
related parties within normal employee, customer or supplier relationships on terms and conditions no more favourable
than those available in similar arm’s length dealings.
There were no other transactions with related parties during the current year.
Key management personnel compensation
The following table shows the compensation paid or payable to the key management personnel (‘executives’)
of the Group.
Short-term employee benefits
Post-employment benefits
Share based payments
Total
2021
$
2020
$
4,760,936
3,796,905
65,916
457,187
63,008
6,897,611
5,284,039
10,757,524
Additionally, compensation paid to non-executive directors was $2,113,997 (F20: $1,964,059).
NOTE 31 – REMUNERATION OF AUDITORS
The Audit and Risk Committee has completed an evaluation of the overall effectiveness and independence of the
external auditor, KPMG. As part of this process, the external auditor has provided a written statement that no professional
engagement with the Group has been carried out which would impair their independence as auditor. The Chairman of
the Audit and Risk Committee has advised the Board that the Committee’s assessment is that the auditor is independent.
During the year, the following fees were paid or payable for services provided by the auditor of the Group, and its
related practices:
Audit and review of financial statements and other
audit work under the Corporations Act 2001
Associate firms of Auditor
Other assurance services
Audit and review services
Other non-audit services
Total
2021
$
2020
$
1,426,128
493,530
–
1,919,658
439,280
2,358,938
1,303,462
420,737
–
1,724,199
58,882
1,783,081
The Group engages KPMG to provide other non-audit services where their expertise and experience best qualifies them
to provide the appropriate service and as long as stringent independence requirements are satisfied. In the year ended
30 June 2021, KPMG earned fees in respect to the provision of advisory and taxation services.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 121
Notes to the consolidated financial statements:
Other
For the year ended 30 June 2021
NOTE 32 – OTHER ACCOUNTING POLICIES
New accounting standards and interpretations
Since 30 June 2020, the Group has adopted the following new and amended accounting standards.
Reference
Title
References to Conceptual Framework
AASB 2, AASB 101, AASB 108, AASB 110,
AASB 134, AASB 137, the Framework
and AASB Practice Statement 2
AASB 3
AASB 7, AASB 9 & AASB 139
AASB 16
IFRIC agenda decision
Amendments to Australian Accounting Standards –
References to the Conceptual Framework
Amendments to Australian Accounting Standards –
Definition of Material
Amendments to Australian Accounting Standards –
Definition of a Business
Amendments to Australian Accounting Standards –
Interest Rate Benchmark Reform
Amendments to Australian Accounting Standards –
Covid-19-Related Rent Concessions
Configuration or Customisation Costs in a Cloud
Computing Arrangement (IAS 38 Intangible Assets)
Application
1 January 2020
1 January 2020
1 January 2020
1 January 2020
1 June 2020
April 2021
Other than the impact of IFRIC agenda decision Configuration or Customisation Costs in a Cloud Computing
Arrangement (IAS 38 Intangible Assets) – April 2021 outlined below, the adoption of these standards did not have
a significant impact on the consolidated financial statements.
Issued but not yet effective accounting standards
The following relevant accounting standards have recently been issued or amended but are not yet effective and
have not been adopted for this year-end reporting period.
Reference
Title
AASB 4, AASB 7, AASB 9,
AASB 16 & AASB 139
Amendments to Australian Accounting Standards –
Interest Rate Benchmark Reform – Phase 2
AASB 1, AASB 3, AASB 9,
AASB 116, AASB 137 & AASB 141
Amendments to Australian Accounting Standards –
Annual Improvements 2018–2020 and Other Amendments
AASB 101
AASB 4 & AASB 17
Amendments to Australian Accounting Standards –
Classification of Liabilities as Current or Non-current
Amendments to Australian Accounting Standards –
Insurance Contracts
AASB 17
Insurance Contracts
Application
1 January 2021
1 January 2022
1 January 2023
1 January 2021
1 January 2023
These standards are not expected to have a material impact on the Group’s financial position or its performance.
IFRIC agenda decision Configuration or Customisation Costs in a Cloud Computing Arrangement
(IAS 38 Intangible Assets)
The International Financial Reporting Standards Interpretations Committee (IFRIC) has issued two final agenda decisions
which impact SaaS arrangements:
• Customer’s right to receive access to the supplier’s software hosted on the cloud (March 2019) – this decision considers
whether a customer receives a software asset at the contract commencement date or a service over the contract term.
• Configuration or customisation costs in a cloud computing arrangement (April 2021) – this decision discusses whether
configuration or customisation expenditure relating to SaaS arrangements can be recognised as an intangible asset
and if not, over what time period the expenditure is expensed.
The adoption of the above agenda decisions has resulted in the immediate recognition of certain configuration and
customisation costs as an expense in the Statement of Comprehensive Income, impacting prior periods presented.
The new accounting policy is presented in Note 13.
122 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 32 – OTHER ACCOUNTING POLICIES (CONTINUED)
Impact of adopting new policies
The below summarises the impact of adopting the new policies on the Group’s consolidated financial statements for those
periods presented within the 30 June 2021 financial statements. Only restated lines have been included in the tables below.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (EXTRACT)
Operating profit has been restated to remove amortisation expense on previously capitalised intangible assets that do not
meet the requirements of the IFRIC agenda decision, and to recognise previously capitalised costs incurred as an expense
in the year that do not meet the requirements of the IFRIC agenda decision. Adjustments to tax are due to the change
in profit before tax.
Administration expenses
Other income/(expenses)
Profit before tax
Income tax expense
Net profit attributed to members of Treasury Wine Estates Limited
Cash flow hedges
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable
to members of Treasury Wine Estates Limited
Total comprehensive income for the year
Earnings per share for profit attributed to the ordinary
equity holders of the Company
– Basic
– Diluted
30 June 2020
reported
$m
Increase/
(decrease)
$m
30 June 2020
restated
$m
(144.7)
(50.8)
369.7
(108.9)
260.8
(15.5)
2.9
263.7
263.7
(22.1)
1.1
(20.9)
5.6
(15.4)
–
–
(15.4)
(15.4)
(166.8)
(49.7)
348.7
(103.3)
245.4
(15.5)
2.9
248.3
248.3
Cents
per share
Increase/
(decrease)
Cents
per share
36.2
36.2
(2.1)
(2.2)
34.1
34.0
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EXTRACT)
The Group derecognised previously capitalised intangible assets that do not meet the requirements of the IFRIC agenda
decision. Deferred tax adjustments are due to timing differences arising from the derecognition of intangible assets.
Shareholders equity has been restated to reflect the cumulative impact of the IFRIC agenda decision on retained earnings.
Assets
Intangible assets
Deferred tax assets
Equity
Retained earnings
Assets
Intangible assets
Deferred tax assets
Equity
Retained earnings
30 June 2020
reported
$m
Increase/
(decrease)
$m
30 June 2020
restated
$m
1,331.6
183.5
(37.5)
10.3
1,294.1
193.8
337.5
(27.3)
310.2
30 June 2019
Reported
$m
Increase/
(decrease)
$m
30 June 2019
Restated
$m
1,308.9
187.0
(16.6)
4.8
1,292.3
191.8
364.5
(11.8)
352.7
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 123
Notes to the consolidated financial statements:
Other
For the year ended 30 June 2021
NOTE 32 – OTHER ACCOUNTING POLICIES (CONTINUED)
CONSOLIDATED STATEMENT OF CASH FLOWS (EXTRACT)
There is no impact on overall cash flows of the Group from the change in accounting policy. Payments for intangible
assets that do not meet the requirements of the IFRIC agenda decision have been reclassified from investing activities
to payments to suppliers, governments and employees in operating activities.
Payments to suppliers, governments and employees
Payments for intangible assets
SEGMENT INFORMATION (EXTRACT)
30 June 2020
$m
reported
Increase/
(decrease)
$m
30 June 2020
$m
restated
(2,975.7)
(29.9)
(21.9)
21.9
(2,997.6)
(8.0)
The table below outlines the impact of the IFRIC agenda decision on reported EBITS, amortisation expense, segment assets
and segment liabilities.
Increase/(Decrease)
–
(10.4)
ANZ
$m
Americas
$m
133.3
(3.2)
147.3
(10.4)
Asia
$m
243.7
(2.2)
EMEA
$m
51.7
(2.2)
Total
segment
$m
Unallocated/
corporate
$m
Consolidated
$m
576.0
(18.0)
(42.5)
(2.9)
533.5
(20.9)
130.1
136.9
241.5
49.5
558.0
(45.4)
512.6
(0.6)
–
(0.6)
(90.8)
–
(3.6)
–
(3.6)
(32.0)
7.6
(90.8)
(24.4)
2,514.5
2,783.9
–
–
–
(1.2)
–
(1.2)
(1.6)
–
(1.6)
(1.4)
–
(1.4)
(5.8)
–
(5.8)
(14.9)
1.1
(20.7)
1.1
(13.8)
(19.6)
(125.4)
7.6
(24.3)
14.3
(149.7)
21.9
(117.8)
(10.0)
(127.8)
163.2
–
428.6
5,890.2
–
(10.4)
781.7
(16.8)
6,671.9
(27.2)
2,514.5
2,773.5
163.2
428.6
5,879.8
764.9
6,644.7
(63.5)
–
(50.7)
2.8
(63.5)
(47.9)
(2.1)
–
(2.1)
(0.9)
–
(117.2)
2.8
(35.2)
13.5
(152.4)
16.3
(0.9)
(114.4)
(21.7)
(136.1)
Management EBITS –
30 June 2020 reported
Increase/(Decrease)
Management EBITS –
30 June 2020 restated
Amortisation –
30 June 2020 reported
(Increase)/Decrease
Amortisation –
30 June 2020 restated
Capital expenditure –
30 June 2020 reported
(Increase)/Decrease
Capital expenditure –
30 June 2020 restated
Segment Assets –
30 June 2020 reported
Segment Assets –
30 June 2020 restated
Capital expenditure –
30 June 2019 reported
(Increase)/Decrease
Capital expenditure –
30 June 2019 restated
Segment Assets –
30 June 2019 reported
Increase/(Decrease)
–
(2.8)
2,505.1
2,841.3
223.0
–
370.9
–
5,940.3
(2.8)
701.2
(9.0)
6,641.5
(11.8)
Segment Assets –
30 June 2019 restated
2,505.1
2,838.5
223.0
370.9
5,937.5
692.2
6,629.7
124 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 32 – OTHER ACCOUNTING POLICIES (CONTINUED)
SEGMENT INFORMATION (EXTRACT) (CONTINUED)
Non-current assets
Australia
United States of America
United Kingdom
Other geographical locations
Total geographical non-current assets
Other non-current assets
Consolidated non-current assets
Non-current assets
Australia
United States of America
United Kingdom
Other geographical locations
Total geographical non-current assets
Other non-current assets
Consolidated non-current assets
30 June 2020
reported
$m
Increase/
(decrease)
$m
30 June 2020
restated
$m
1,882.0
2,159.8
145.8
157.0
4,344.6
227.0
4,571.6
(27.2)
(10.3)
–
–
(37.5)
10.3
(27.2)
1,854.8
2,149.5
145.8
157.0
4,307.1
237.3
4,544.4
30 June 2019
reported
$m
Increase/
(decrease)
$m
30 June 2019
restated
$m
1,871.0
2,148.8
152.2
123.5
4,295.5
199.7
4,495.2
(13.9)
(2.7)
–
–
(16.6)
4.8
(11.8)
1,857.1
2,146.1
152.2
123.5
4,278.9
204.5
4,483.4
The presentation of non-current assets is based on the geographical location of the assets.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 125
Notes to the consolidated financial statements:
Other
For the year ended 30 June 2021
NOTE 32 – OTHER ACCOUNTING POLICIES (CONTINUED)
Other accounting policies
Finance income
Finance income is recognised as the interest accrues (using the effective interest method, which applies a rate that
discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying
amount of the financial asset.
Finance costs
Finance costs are recognised as an expense when they are incurred, except for interest charges attributable to major
projects with substantial development and construction phases, which are capitalised as part of the cost of the asset.
Financial assets
A financial asset is classified as at fair value through profit or loss or fair value through other comprehensive income
unless it meets the definition of amortised cost. This is determined on initial recognition.
Financial assets classified as at amortised cost are measured initially at fair value and adjusted in respect of any
incremental and directly attributable transaction costs. All other financial assets are measured at fair value on initial
recognition.
Reclassification occurs only if there are fundamental changes to the Group’s business model for managing
financial assets.
Amortised cost
A financial asset is classified as at amortised cost only if the asset is held to collect contractual cash flows and the
contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest.
A financial asset is measured at amortised cost using the effective interest rate method. Any gains and losses are
recognised through the amortisation process or when the financial asset is derecognised or impaired.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are determined using historical recovery of contractual cash flows and the amount of loss
incurred, adjusted for current economic and credit conditions.
An impairment loss is based on the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original
effective interest rate. Impairment losses on assets classified as amortised cost are recognised in profit or loss
when they are expected, not when they are incurred. If a later event causes the impairment loss to decrease,
the amount is reversed in profit or loss.
Derecognition of financial assets
The derecognition of a financial asset takes place when the Group no longer controls the contractual rights that
comprise the financial instrument.
This is normally the case when the instrument is sold or all the cash flows attributable to the instrument are passed
through to an independent third party.
Derivatives
The Group uses derivative financial instruments such as foreign currency contracts, interest rate swaps and options
to hedge its risks associated with interest rate and foreign currency fluctuations. Such derivative financial instruments
are carried at fair value and are financial assets when the fair value is positive and financial liabilities when the fair
value is negative.
For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are
taken directly to profit or loss for the year.
Hedge accounting
For the purposes of hedge accounting, hedges are classified as either fair value hedges when they hedge the
exposure to changes in the fair value of a recognised asset or liability; cash flow hedges where they hedge exposure
to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability
or a forecasted transaction; or hedges of a net investment in a foreign operation.
Initial recognition
At the beginning of a hedge relationship, the Group designates and documents the hedge relationship and the related
risk management objective and strategy. The documentation identifies the hedging instrument and the hedged item
as well as describing the economic relationship, the hedge ratio between them and potential sources of ineffectiveness.
The documentation also includes the nature of the risk being hedged and the method of assessing the hedging
instrument’s effectiveness. To achieve hedge accounting, the relationship must be expected to be highly effective
and are assessed on an ongoing basis to determine that they continue to meet the risk management objective.
126 – TREASURY WINE ESTATES ANNUAL REPORT 2021
NOTE 32 – OTHER ACCOUNTING POLICIES (CONTINUED)
Re-balancing
If the hedge ratio for risk management purposes is no longer met but the risk management objective remains
unchanged and the hedge continues to qualify for hedge accounting, the Group will rebalance the relationship
by adjusting either the volume of the hedged item or the volume of the hedging instrument.
Discontinuation
Hedge accounting is discontinued when the hedge instrument expires or is sold, terminated or exercised, or no longer
qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised
in equity is kept in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur,
the net cumulative gain or loss recognised in equity is transferred to profit or loss for the year.
Gains or losses recognised directly in equity are reclassified into profit and loss in the same period or periods the
foreign currency risk affects consolidated profit and loss.
Fair value hedges
For fair value hedges (for example, interest rate swaps), any gain or loss from remeasuring the hedging instrument
is recognised immediately in the statement of profit or loss and other comprehensive income. Where the adjustment
is to the carrying amount of a hedged interest-bearing financial instrument, the adjustment is amortised to the
statement of profit or loss and other comprehensive income such that it is fully amortised by maturity.
Cash flow hedges
In relation to cash flow hedges (forward foreign currency contracts) to hedge firm commitments, the portion of the
gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity
and the ineffective portion is recognised in the statement of profit or loss and other comprehensive income.
When the hedged item gives rise to the recognition of an asset or a liability, the associated deferred gains or losses
are included in the initial measurement of the asset or liability.
For all other cash flow hedges, the gains or losses that are recognised in equity are transferred to the statement
of profit or loss and other comprehensive income in the same period in which the hedged firm commitment affects
the profit and loss, for example when the future sale actually occurs.
NOTE 33 – CONTINGENT LIABILITIES
From time to time, Companies within the Group are party to various legal actions as well as inquiries from regulators and
government bodies that have arisen in the normal course of business. The Directors have given consideration to such
matters which are or may be subject to claims or litigation at year end and are of the opinion that that any liabilities
arising over and above already provided in the financial statements from such action would not have a material effect
on the Group’s financial performance.
It is not practical to estimate the potential effect of these matters however the Group believe that it is not probable that
a significant liability will arise.
Class actions
Two Australian shareholder class actions have been commenced against TWE Limited.
The first action was served on 2 April 2020 by Slater & Gordon (S&G) acting for Brett Stallard as trustee for the Stallard
superannuation fund. The second action was served on 1 May 2020 by Maurice Blackburn (MB) acting for Steven Napier.
The class in both proceedings comprise shareholders who purchased shares between 30 June 2018 and 28 January 2020.
Both proceedings allege that the Company breached its continuous disclosure obligations under the ASX Listing Rules
and the Corporations Act and that it engaged in misleading or deceptive conduct in contravention of the Corporations
Act and the ASIC Act. The two actions were consolidated into a single action on 15 October 2020.
With regard to claims, the Company strongly denies any and all allegations made against it and is vigorously defending
the proceedings.
Based on the information currently available, the Company does not know the quantum of either class action.
No provision has been recognised at 30 June 2021 in respect of the claim.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 127
Directors’ declaration
For the year ended 30 June 2021
In accordance with a resolution of the Directors of Treasury Wine Estates Limited, the Directors declare that:
(a) In the Directors’ opinion, the financial statements and notes 1 to 33 are in accordance with the Corporations
Act 2001, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its performance
for the financial year ended on that date.
(b) In the Directors’ opinion, there are reasonable grounds to believe that Treasury Wine Estates Limited will be able to pay
its debts as and when they become due and payable.
(c) There are reasonable grounds to believe that members of the Closed Group identified in note 27 will be able to meet
any liabilities to which they are or may become, subject because of the Deed of Cross Guarantee described in note 29.
(d) Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
(e) The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer as required
by section 295A of the Corporations Act 2001.
Paul Rayner
Chairman
19 August 2021
Tim Ford
Chief Executive Officer
128 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Independent auditor’s report
Independent Auditor’s Report
To the shareholders of Treasury Wine Estates Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Treasury Wine Estates Limited
(the
Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
giving a true and fair view of the
Group’s financial position as at 30
June 2021 and of
financial
performance for the year ended on
that date; and
its
complying with Australian Accounting
the Corporations
Standards
Regulations 2001.
and
The Financial Report comprises:
Consolidated statement of financial position as at 30
June 2021;
Consolidated statement of profit or loss and other
comprehensive income, Statement of changes in
equity, and statement of cash flows for the year then
ended;
Notes including a summary of significant accounting
policies; and
Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code) that are relevant to our
audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in
accordance with the Code.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo
are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a
scheme approved under Professional Standards Legislation.
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 129
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
Key Audit Matters
The Key Audit Matters we identified are:
Valuation of inventory; and
Recognition of discounts and rebates.
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our audit
of the Financial Report as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters.
Valuation of inventory (total finished goods and work in progress inventory was $1,896.5
million)
Refer to Note 9 Working Capital to the Financial Report
TThe key audit matter
THow the matter was addressed in our audit
Our procedures included:
Ttesting key controls designed by the Group to
identify slow moving and obsolete inventories
(including wine held by third party distributors
and retailers), which if existing, may indicate
valuation issues with work in progress and
finished goods;
in progress and
Ttesting year-end inventory valuation models, in
particular the identification and valuation of
work
finished goods
considered to be ‘at risk’ (i.e. where the costs
may potentially exceed the estimated net
realisable value at the time of sale). We
considered forecast sales plans,
inventory
holding reports (including wine held by third
party distributors and retailers), committed
future supply contracts and the outcomes of
the Group’s process to identify slow moving
and obsolete inventories. For a sample of ‘at
risk’ inventory we:
Tevaluated the proposed inventory value
against brand strategies and forecast sales
plans for consistency; and
the
reasonableness
Tassessed
of
management’s action plans in place to
mitigate the risk that wine will be sold below
cost and facilitate the sale of potential at risk
inventory above cost.
the
Tassessing
valuation models
used,
mathematical accuracy of
integrity of
inventory
the
including
the
the underlying
TThe valuation of inventories of finished goods
and work in progress is a key audit matter as we
need to consider estimates and judgements
made by the Group. These include inherently
subjective judgements about forecast demand
and estimated market sales prices at the time
the wine is expected to be sold. We focus our
work on assessing the judgements contained in
the valuation models for:
Tthe period of time over which some
harvested grapes are converted from work
in progress to bottled wine ready for sale
(the holding period) which can be a number
of years depending on the varietal and type
of wine; and
Tforecast demand and market sales prices,
which can fluctuate significantly over the
holding period and are influenced by the
fundamentals of the global wine industry,
including fluctuations in demand and supply
and other factors that impact agricultural
outputs. These factors influence the Group’s
determination of the most likely market
conditions at the estimated date of sale. A
key indicator for at-risk inventory values,
in
finished goods and work
including
progress
is the
in the holding period,
identification of current slow moving and
inventories. These can signal
obsolete
changes in consumer demand patterns or
potential over-supply issues which may
impact forecast prices.
130 – TREASURY WINE ESTATES ANNUAL REPORT 2021
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
calculation formulas;
Tattending cycle counts and / or year-end
inventory counts in significant locations, which
included observing the process of identifying
slow moving and potentially obsolete inventory;
Tcomparing the estimated net realisable value of
slow moving inventories identified in prior
periods to actual sales outcomes subsequently
achieved, to assess the historical accuracy of
the Group’s forecasting process; and
Tassessing the Group’s
inventory valuation
methodologies and the Group’s disclosures in
respect of inventory valuation against the
requirements of relevant accounting standards.
Recognition of discounts and rebates (Net Sales revenue, which is net of trade discounts and
volume rebates, was $2,569.6 million)
Refer to Note 3 Revenue of the Financial Report.
TThe key audit matter
THow the matter was addressed in our audit
TThe Group’s policy is to record net sales revenue
at the time goods are shipped to customers
based on the price specified in the sales
agreement, net of any estimated discount or
rebate. In some cases, the discount or rebate
will not be finally determined or paid until the
inventory is depleted from the customer’s
warehouse, which may be some time after the
Group’s sale date to their customer. Sales
agreement terms and historical trends are used
by the Group to estimate the discounts. The
impact of any one-off events are considered by
the Group in the estimation of the accrual.
TAt year end, the Group estimates and accrues
amounts for discounts and rebates they consider
have been incurred and not yet paid. The Group’s
estimation of these amounts at the year-end is
considered as a key audit matter due to the
significance of the Group judgements applied
and
customer
arrangements that are in place. For example, the
Group’s judgement is required to estimate the
rebates are
accrual where discounts and
dependent on customers achieving annual sales
targets and the performance year does not align
to the Group’s financial year.
the number of unique
Our procedures included:
considering the appropriateness of the Group’s
accounting policy for the recognition and
measurement of net sales revenue, including
the policy for recording discounts and rebates,
by assessing compliance with applicable
accounting standards;
testing the estimation of discounts and rebates
accruals. We used underlying documentation
such as customer agreements, shipment and
depletion data, claims for discounts and rebates
along with cash payments made. We evaluated
the estimate, for a sample of customers, by:
checking amounts to the agreements; and
analysing sales and depletion to date, and
depletion programs expected to take place
in future periods against sales budgets,
depletion plans and actual claims, to assess
the estimate of discounts and rebates
incurred but not yet paid.
testing key controls in significant jurisdictions
for calculating,
reviewing and approving
discounts and rebates;
assessing the integrity of the discount and
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 131
2
9
T
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
2
9
T
2
9
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
rebate models
mathematical accuracy of
calculation formulas;
used,
including
the
the underlying
challenging the nature and quantum of the
amounts recorded by reference to historical
sales, rebates paid, and discounts paid. We also
tested, on a sample basis, the nature and level
of such amounts back to contractually agreed
terms;
assessing the accuracy of the accrual in
previous years in order to challenge the Group’s
current year estimation processes; and
considering
the Group’s disclosures with
respect to revenue, discounts and rebates
accruals
standard
requirements.
accounting
against
Other Information
Other Information is financial and non-financial information in Treasury Wine Estates Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors
are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information.
In doing so, we consider whether the Other Information is materially inconsistent with the Financial
Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date
of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error
assessing the Group and Company’s ability to continue as a going concern and whether the use
of the going concern basis of accounting is appropriate. This includes disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless they
either intend to liquidate the Group and Company or to cease operations, or have no realistic
alternative but to do so.
132 – TREASURY WINE ESTATES ANNUAL REPORT 2021
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Treasury Wine Estates Limited for the year
ended 30 June 2021, complies with
Section 300A of the Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report
in accordance with Section 300A of the Corporations Act
2001.
Our responsibilities
We have audited the Remuneration Report included in
pages 54 to 73 of the Directors’ report for the year ended
30 June 2021.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Gordon Sangster
Partner
Melbourne
19 August 2021
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 133
Details of shareholders, shareholdings
and top 20 shareholders
DETAILS OF SHAREHOLDERS AND SHAREHOLDINGS
Holding of securities
Listed securities 15 July 2021
Fully paid ordinary shares
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No. of
holders
No. of
shares
% held by
top 20
87,890
721,848,176
83.57
No. of
holders
Total %
held
61,713
22,979
2,185
951
62
87,890
3.39
6.67
2.11
2.91
84.93
100
As at 15 July 2021, the number of shareholders holding less than a marketable parcel of $500 worth of shares,
based on the closing market price on that date of $12.03 per share, is 1,269.
TWENTY LARGEST SHAREHOLDERS – 15 JULY 2021
Rank
Shareholder
No. of fully paid
ordinary shares
% of fully paid
ordinary shares
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
HSBC Custody Nominees
J P Morgan Nominees Australia
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
BNP Paribas Nominees Pty Ltd Six Sis Ltd
Argo Investments Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
AMP Life Limited
Ecapital Nominees Pty Limited
Mutual Trust Pty Ltd
Milton Corporation Limited
NewEconomy Com AU Nominees Pty Limited <900 Account>
Merrill Lynch (Australia) Nominees Pty Limited
BNP Paribas Nominees Pty Ltd
BNP Paribas Noms (NZ) Ltd
BKI Investment Company Limited
Netwealth Investments Limited
20.
UBS Nominees Pty Ltd
Total
SUBSTANTIAL SHAREHOLDERS – 15 JULY 2021
263,271,365
200,557,135
55,981,068
23,766,814
23,677,359
13,555,232
5,155,950
3,250,000
2,297,559
1,386,386
1,333,649
1,307,118
1,206,363
1,033,185
1,031,921
1,000,000
938,898
850,301
849,664
832,798
36.47
27.78
7.76
3.29
3.28
1.88
0.71
0.45
0.32
0.19
0.18
0.18
0.17
0.14
0.14
0.14
0.13
0.12
0.12
0.12
603,282,765
83.57
The following shareholders have declared a relevant interest in the number of voting shares at the date of giving
the notice under Part 6C.1 of the Corporations Act 2001 (Cth).
Institution
The Capital Group
BlackRock Group
Vanguard Group Inc
134 – TREASURY WINE ESTATES ANNUAL REPORT 2021
No. of fully paid
ordinary shares
% of fully paid
ordinary shares
60,779,529
53,502,603
35,954,902
8.42
7.41
5.00
Shareholder information
ANNUAL GENERAL MEETING
ELECTRONIC COMMUNICATIONS
The Annual General Meeting of the Company will be
held on Friday 15 October 2021 (AEDT). Full details will be
contained in the Company’s Notice of Meeting to be
available on the Company’s website prior to the meeting.
The Company has an online share registry facility where
shareholders can:
• check their current and previous holding balances;
VOTING RIGHTS
Shareholders are encouraged to participate in the Annual
General Meeting, however, when this is not possible,
shareholders may appoint a proxy to participate
in the Annual General Meeting in their place.
Every shareholder participating in the Annual General
Meeting personally or by proxy, attorney or representative
has, on a poll, one vote for each fully paid share held.
SECURITIES EXCHANGE LISTING
Treasury Wine Estates Limited shares are listed on the
Australian Securities Exchange under the code ‘TWE’.
Treasury Wine Estates Limited ordinary shares are traded in
the US in the form of American Depositary Receipts (ADR)
issued by The Bank of New York Mellon as Depositary.
SHARE REGISTER AND OTHER ENQUIRIES
If you have any questions in relation to your shareholding,
share transfers or dividends, please contact our
share registry:
Computershare Investor Services Pty Limited
Yarra Falls 452 Johnston Street
Abbotsford Victoria 3067
Australia
Telephone: 1800 158 360 (Australia)
International: +61 3 9415 4208
Facsimile: +61 3 9473 2500
For faxing Proxy Forms only: +61 3 9473 2555
(outside Australia) or 1800 783 447 (within Australia)
Website: www investorcentre.com/contact
Please include your securityholder reference number (SRN)
or holder identification number (HIN) in all correspondence
to the share registry.
For enquiries relating to the operations of the Company,
please contact the Investor Relations team on:
• update their address details;
• update their bank details;
• review their dividend history;
• confirm whether they have lodged a TFN/ABN exemption;
• elect to receive communications and Company
information electronically, and change their Annual
Report election;
• download commonly used forms; and
• elect to receive email notification when dividend
statements and issuer sponsored holding statements
are available to view online.
To access the online share registry, log on to www
tweglobalcom, go to the Shareholder Information section
located under the Investors menu and click the ‘online
share registry’ icon. For security and privacy reasons,
shareholders will be required to verify their identity before
they can view their records.
TAX FILE NUMBERS, AUSTRALIAN BUSINESS NUMBERS
OR EXEMPTIONS
Australian taxpayers who do not provide details of their tax
file number will have any unfranked portions of dividends
subjected to the top marginal personal tax rate plus
Medicare levy (if applicable). It may be in the interests of
shareholders to ensure that tax file numbers have been
supplied to the share registry. Shareholders may request a
form from the share registry or submit their details via the
online share registry.
CHANGE OF ADDRESS
It is important for shareholders to notify the share registry
of any change of address. As a security measure, the
previous address should also be quoted as well as your
securityholder reference number (SRN). Shareholders may
access the online share registry to submit their details or
download a personalised change of address form.
Telephone: +61 3 8533 3000
Facsimile: +61 3 9685 8001
Email: investors@tweglobalcom
Website: wwwtweglobal.com
Address: Level 8, 161 Collins Street
Melbourne Victoria 3000
Australia
ADR Depositary and Transfer Agent:
BNY Mellon Shareowner Services
462 South 4th Street, Suite 1600
Louisville KY 40202
United States of America
Postal address: PO Box 505000
Louisville KY 40233 – 5000
United States of America
Telephone: 1888 269 2377 – toll free (US)
International: +1 201 680 6825
Email: shrrelations@cpushareownerservicescom
Website: www uscomputershare.com/investor
TREASURY WINE ESTATES ANNUAL REPORT 2021 – 135
SHAREHOLDER INFORMATION (CONTINUED)
SHAREHOLDER WINE OFFER – CELLARDOOR CO
& THEWINESHOP COM
Shareholders in Australia and the US have the opportunity
to purchase the Company’s wines through Cellardoorco
and TheWineShop.com, respectively.
Cellardoor.co is an exclusive members-only online wine
community for shareholders and family and friends of
Treasury Wine Estates. As proud custodians of awarded
and recognised wineries, we invite Australian shareholders
to join Cellardoorco and establish a direct connection to
our iconic vineyards. By joining Cellardoorco you will have
24/7 access to an exceptional range of wines from
Treasury Wine Estates’ award winning wineries at exclusive
shareholder prices.
TheWineShop.com is Treasury Wine Estates’ multi-branded
US shopping experience that highlights many of the most
historic and recognised wineries in Napa and Sonoma.
A new website for us, TheWineShopcom will continue to
evolve and offer more and more offerings as time goes
on. As a TWE shareholder, we invite you to save 30% off any
purchase you make by using the promo code TWESHARE
at checkout.
Australian shareholders:
To become a Cellardoor.co member – Go to https//invite.
cellardoor.co/twe-shareholder1 and enter Access Code
89374 to register.
US shareholders:
Visit https//wwwthewineshop.com/?utm_
source=Shareholders&utm_medium=email&utm_
campaign=TWE_Shareholders_email to shop our portfolio.
TREASURY WINE ESTATES LIMITED
ABN 24 004 373 862
COMPANY SECRETARY
Kirsten Gray BA LLB (Hons), PDM
REGISTERED OFFICE
Level 8, 161 Collins Street
Melbourne Victoria 3000 Australia
Telephone: +61 3 8533 3000
136 – TREASURY WINE ESTATES ANNUAL REPORT 2021
TWE takes the health, wellbeing and safety of its team, customers, consumers and its communities seriously.
Given the COVID-19 global pandemic and the restrictions in place, TWE chose to largely use imagery,
particularly those showing more than two people, photographed prior to the start of the pandemic. As a result
some photos may not show social distancing and other social health practices that remain in place in markets
in which we operate and sell wine.
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